North Carolina Department of Revenue

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North Carolina Department of Revenue

• ADVANCED PERSONAL
• PROPERTY SEMINAR
• Joseph S. Koury Convention Center
• Sheraton Greensboro Hotel at Four Seasons Mall
• Greensboro, North Carolina
• September 26, 2013

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900 pm 950 pm
Valuation of Golf Properties

• Andy Hinds, MAI, SGA
• David Pope, MAI, SRA, SGA
• Hotel and Club Associates, Inc.
• ahinds_at_hotelandclub.com
• dpope_at_hotelandclub.com
• 336-379-1400
• Member of the Appraisal Institute, Society of
  Golf Appraisers

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I. Cost Approach

• Seldom Used by Buyers/Sellers/Brokers
• Courses typically built to add value to
  surrounding real estate amenity
• Limitations
• Land Valuation Subjective
• Clubs sell at a fraction of replacement costs
• Hard to measure external obsolescence

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Land Value

• According to the Dictionary of Real Estate
  Appraisal, Consistent Use is defined as
• The concept that land cannot be valued on the
  basis of one use while the improvements are
  valued on the basis of another.

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Land Value Continued

• Challenges
• Value based on consistent use lack of golf land
  comparables
• Golf not same as residential use
• Golf land more akin to open space
• Residential developers sometimes give land to
  golf course developers

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Depreciation

• Physical Depreciation
• Greens 15 30 year life
• Tees 15-20 year life
• Irrigation 10-15 year life
• Cart Paths 5-30 year life
• External Obsolescence
• Significant levels obsolescence in current
  market
• How to measure

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II. Income Approach

• Uniform System of Financial Reporting for Clubs1
• An example of the Uniform System of Financial
  Reporting for Clubs for a hypothetical public
  golf facility is shown next.

1. Uniform System of Financial Reporting for
Clubs, Sixth Revised edition Club Managers
Association of America, Inc. www.cmaa.org
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Uniform System Example
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Capitalization

• Sources of overall golf capitalization rates
• Actual Golf Sales from
• buyers sellers, brokers, appraisers
• Society of Golf Appraisers www.golfappraisers.org
  
• Realty Rates www.realtyrates.com

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Sales Comparison Approach

• Sources of Data
• Public Records
• Articles
• Appraisers and Brokers
• CB Richard Ellis www.cbre.com
• Hilda Allen www.hilda-allen.com
• Marcus Millichap www.marcusmillichap.com
• Hodges Ward Elliott www.hwehotels.com
• Coldwell Banker Commercial www.kbgolfcoursesales.c
  om
• Golf Pros, Managers and Owners
• Publications
• Golf Inc. www.golfincmagazine.com
• Golf Business Magazine www.golfbusiness.com

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Units of Comparison

• GRM Gross Revenue Multiplier or NIM Net
  Income Multiplier
• Price per Hole
• Price Per Round, Price Per Acre or Price Per
  Member

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Allocation

• Total Going Concern Value/Price
• Must Allocate
• Business Personal Property
• Intangible Business Enterprise
• Real Property