Rendering of Drive Shack’s Orlando facility, which opened in April 2018.
The emerging competitor to Topgolf is selling all 26 of its American Golf-owned properties to generate nearly $175 million in capital to put toward development of new “eatertainment” facilities. Eight of the properties that were sold are in California; buyers were not disclosed.
Drive Shack Inc., which is in the midst of transforming its operations into solely a golf entertainment and leisure company by selling off its owned golf course properties, took a “massive step” in implementing its disposition strategy with the sale of 11 of its golf properties in California, Oregon, Idaho and Georgia, reported GlobeSt.com, a website for commercial real estate news.
The publicly-traded company netted approximately $82.5 million in the sale of its courses owned and operated by American Golf subsidiaries, GlobeSt.com reported. The courses sold include eight in California: Canyon Oaks Country Club (Chico); El Camino Country Club (Oceanside); Monterey Country Club (Palm Desert); Oakhurst Country Club (Clayton); Palm Valley Country Club (Palm Desert); Seascape Golf Club (Aptos); Sunset Hills Country Club (Thousand Oaks); and Wood Ranch Golf Club (Simi Valley).
Other clubs that were sold included The Trophy Club of Apalachee in Dacula, Ga.; Oregon Golf Club in West Linn, Ore.; and Plantation Country Club in Garden City, Idaho. C&RB reported in December 2018 on concerns regarding the rumored sale of Plantation CC (https://clubandresortbusiness.com/possible-sale-of-plantation-cc-raises-local-concerns/).
Drive Shack did not divulge the buyers of the 11 golf courses traded, GlobeSt.com reported, although it did state that subsidiary American Golf will remain the management company for each of the golf properties sold, with the exceptions of the Apalachee, Oakhurst and Seascape courses.
The net proceeds from the sales were used, together with cash on hand, to prepay $102 million in outstanding debt, GlobeSt.com.
Drive Shack had announced earlier this year its plan to sell all 26 of its American Golf-owned properties, GlobeSt.com reported, and expects to generate nearly $175 million in capital from the sales. Thus far, a total of 12 courses have been sold. American Golf will continue to operate its leased and managed properties and grow the portfolio through the addition of new management agreements, GlobeSt.com reported.
“This is a massive step forward in our strategy to monetize the portfolio of owned courses” said Ken May, CEO of Drive Shack. “We continue to move in the right direction with American Golf, focusing on optimizing and growing our leased and managed courses.”
May, the former CEO of golf entertainment company Topgolf, joined Drive Shack last month as its President and CEO, along with David Hammarley, who took on the role of Chief Financial Officer. During his four years at Topgolf, May oversaw 24 openings and a quadrupling of the company’s workforce, GlobeSt.com reported, to continue the explosion of growth—and spawning of new entrants—in what has now become known as the “eatertainment” segment of the golf industry.
In November, Drive Shack announced plans to open a new golf entertainment and recreation complex in New York City, after the New York City Department of Parks and Recreation awarded the company a site at Randall’s Island Park, GlobeSt.com reported. Through the project, Drive Shack will completely rebuild and replace the existing golf driving range with a year-round golf-centric recreation facility.
The current Randall’s Island Park driving range is undergoing improvements and will reopen in April 2019 under Drive Shack’s subsidiary, American Golf. Operations will continue under American Golf’s supervision until breaking ground on the three-story venue, GlobeSt.com reported.
The new 18-acre facility will then offer 96 climate-controlled hitting bays, each holding up to six guests. Drive Shack says it plans to break ground on the new facility at Randall’s Island in 2020, GlobeSt.com reported.
Drive Shack also announced last month that it recorded a loss of $15 million in the third quarter, or $0.23 per share, for the three months ended September 30, 2018, compared to a loss of $2 million, or $0.03 per share, in the corresponding period of the prior year, GlobeSt.com reported.
Drive Shack opened its first venue in Orlando in April 2018 and then opened several other locations, GlobeSt.com reported, including in Raleigh, N.C., Richmond, Va., and West Palm Beach, Fla.