While NCT is performing, I thought that NCT was going to be a pure play senior living REIT. IMO, these golf course loans should have been part of NRZ when the company's split. I don't mind making money where we can, but NCT should move toward a pure play HC REIT. Wes even talked about spinning off the CDOs if they could not be unwinded in a timely fashion. The call today will be interesting.
Check out the 4Q2013 presentation now posted on NCTs website that provides an overview of the Golf acquisition.
As was the case with NEWM, it looks like NCTs foray into Golf is due to their (CDOs) holding $68MM in Mezz loans made to American Golf Corporation. They bought out the equity for a song (2 million), worked out some refinancing and took 50/50 stake in the 1st mortgage.
I'd rather this be the case than kiss $68MM goodbye.
It looks interesting, but it cost us more than $2M. NCT also invested $47 million for a stake in the first mortgage. Total net out of pocket: $49M.
From my review of the locations, a lot of the courses are in very good areas. As the real estate market improves I am wondering the possibilities of building golf communities at some of the locations, but I honestly do not know the feasibility of that when it is planned as an after thought. Of course, other development ideas are also possible. Again, I do not know how easily it would be to have the land rezoned for other uses.
Also, as more baby boomers age and retire, the tee times may fill up more. Wes is certainly opportunistic and I look forward to see how he develops this new piece of the business. Good luck to us all!
What do golf courses have in common with MSRs? Where are these courses? In the snow belt? Anything on their revenues or profits? I'm wondering if I've played any of these 92 courses. Interesting! Where do these deals keep on coming from? As a shareholder, I'm beginning to feel left in the dark about the business model. This is beginning to look more like a BDC than a REIT which might not be too bad if it does as well as Carlisle Group!
I tried to do some up to date research on the Golf courses ( National and American), not much out there. There were about 7-8 around the Phoenix area a few years back but are no longer on the present day list, since they are still open I'm assuming they have changed hands in the past few years ( there was also some very needed upgrading on most of them). I feel sure that this was to be short lived deal at NCT and there will be a spin off as soon as possible. Golf courses are not at the top of the food chain right now and many of the ones here are doing heavy advertising and offering special deals and this in what is considered " the season" here. There have seen several re-fi's on them in the last few years which sounds like they were in trouble and probably some of the better properties were sold off in the process for needed cash or at least to lighten the debt burden. I for one do not want to be in the golf course business in the near future (5-10 years).