Financing Golf Courses, Country Clubs and Resort Properties
First National provides commercial financing for qualified owners, purchasers and experienced sponsors of golf courses, country clubs and resort golf properties.
For more than four decades, First National has originated, underwritten, closed and serviced commercial real estate loans. As a Principal Lender, First National provides its own capital, conducts its own underwriting and makes its own lending decisions.
Golf properties are specialized operating businesses. Their financial performance can depend upon membership, rounds played, dues, initiation fees, green fees, food and beverage operations, events, course maintenance, irrigation, water availability, management and continuing capital investment.
For that reason, First National evaluates more than the underlying land and improvements. We seek to understand the entire golf operation and the applicable business assets supporting its value and cash flow.
We provide our own capital and make our own lending decisions.
We assess the golf business, its assets and the cash flow supporting the loan.
First National considers financing for qualified golf courses, private country clubs, public and daily-fee golf courses, and resort golf properties.
Financing may be considered for acquisition, refinancing, major capital improvements and other qualified financing requirements.
Minimum Loan Amount: $5 million
Typical Loan Size: $6 million to $9 million
Typical Loan-to-Value: Approximately 65%
First National considers qualified golf financing transactions throughout the continental United States, excluding North Dakota and Louisiana. First National does not presently lend in Alaska or Hawaii.
Each transaction is individually underwritten. Final loan structure depends upon the property, operating business, sponsorship, financial performance, collateral and other underwriting considerations.
First National provides financing for a variety of golf course and country club transactions, including:
Owners, purchasers and qualified sponsors seeking financing for golf courses, country clubs or resort golf properties may contact First National to discuss a proposed transaction.
As a Principal Lender, First National combines its own capital with more than four decades of commercial real estate lending, underwriting, closing and servicing experience.
Preparing for golf course financing starts with understanding what a lender will evaluate. Our complimentary guide covers revenue quality, memberships and rounds, deferred capital needs, water and irrigation, and First National’s published golf program parameters.
It also outlines a borrower package to help you organize the information typically needed before starting a financing conversation.
Golf course financing differs from conventional commercial real estate lending.
The property includes land and physical improvements, but the ability to support debt generally depends upon a functioning operating business. First National therefore seeks to understand both the real estate and the business operating upon it.
Depending upon the type of property, underwriting may include:
The objective is to understand not simply what the property earned last year, but how those earnings were generated and what will be required to sustain them.
A golf course cannot be evaluated properly without understanding how it obtains and distributes water.
Depending upon the property and geographic location, First National may consider the source of:
A course may have attractive land, a strong clubhouse and established demand, but inadequate or excessively expensive water can materially affect its future economics.
Likewise, replacement of an aging irrigation system can represent a substantial capital expenditure.
For those reasons, First National considers water availability, cost and irrigation infrastructure as part of its assessment of a golf property’s sustainable operations.
A private club reporting a large membership base may initially appear financially strong. Membership totals alone, however, do not necessarily reveal the economics of the club.
A lender may want to understand:
A club adding 75 members while losing 70 existing members has a different membership trend from a club adding 75 while losing only 10.
Similarly, growth in lower-priced membership categories may have a different financial effect from growth in full-golf memberships.
First National therefore considers the quality, stability and economics of membership, not simply the reported number of members.
EBITDA can be an important measure of operating performance, but it does not necessarily identify all of the capital required to maintain a golf property.
A golf course reporting attractive current earnings may nevertheless have an irrigation system approaching the end of its useful life. Maintenance equipment may require replacement.
The clubhouse may need substantial renovation. Drainage problems may need correction. Greens or bunkers may require significant work.
Those expenditures may not be fully reflected in current EBITDA.
For a lender, the important question is therefore not simply, “What is the golf course earning today?” It is also, “What capital will be required to preserve those earnings?”
First National seeks to understand both.
A property with sustainable operating performance and a well-maintained physical plant presents a different credit profile from a property producing similar current earnings while accumulating substantial deferred capital requirements.
Depending upon the transaction, borrowers should be prepared to provide some or all of the following:
A golf property generally combines real estate with an operating business. Its ability to support debt may depend upon membership, rounds played, pricing, management, course condition, water, ancillary operations and continuing capital expenditures.
Yes. First National considers qualified private country clubs as well as public and daily-fee golf courses and resort golf properties.
First National’s minimum golf loan amount is $5 million. Typical First National golf loans are approximately $6 million to $9 million, although every transaction is individually evaluated.
First National’s typical golf course loan-to-value is approximately 65%, subject to underwriting and the individual transaction.
Any appraisal relied upon by First National in making its lending decision is ordered directly by First National.
Membership revenue can represent a significant portion of a private club’s operating income. Additions, resignations, membership categories, dues and initiation fees help a lender understand the stability and economics of the membership base.
Reliable water and an effective irrigation system are essential to maintaining most golf courses. Water availability, cost, restrictions and irrigation-system condition can therefore affect both operating expenses and future capital requirements.
Yes. Golf course financing may involve the operating business and applicable assets associated with the property, not merely the underlying real estate.
Yes. First National considers acquisition financing for qualified purchasers of golf courses, country clubs and resort golf properties.
Yes. First National may consider financing for substantial capital projects, including appropriate course, irrigation and clubhouse improvements.
