ClubLink Enterprises Ltd.'s acquisition spree in the United States continued this month with the purchase of the 54-hole Palm-Aire Country Club in Pompano Beach, Florida.
The $7.2-million Palm-Aire purchase gives the golf course and resort operator a total of 11 18-hole courses in Florida with a combined membership of more than 4,500 members. The latest acquisition is part of a plan to be a major player in geographic clusters in the sunshine state.
“Now we have six (courses) in the Fort Lauderdale area and five in Sun City which is just south of Tampa,” said Robert Visentin, ClubLink`s Chief Financial Officer. “So we have a cluster on each coast in Florida and whether we continue on the same spree we have been on in the last 15 months we bought 11” courses, he said.
While continuing to look for golf courses that match its acquisition criteria Clublink intends to sit back, consider what it has bought and make sure it is operating well explained Visentin.
ClubLink's current acquisition strategy is centered on Ontario, Quebec and Florida and its southern focus is based on simple economics. “The Canadian economy seems to be more buoyant and I think peoples' perception of golf values are out of sync with what we perceive to be the market in Canada,” said the ClubLink CFO.
Given the poor state of the United States economy over the past few years, club owners realize that if the want to sell they will have to accept the current market value, Vistentin explained. The value at which people are willing to trade in Florida is lower than buying a golf course in Canada.
ClubLink is buying 18-hole courses in Florida for an average of just over $2 million, “whereas the cheapest one we have bought in Canada in the last few years is $3.2 million.”
The process of vetting potential purchases and deciding whether or not to buy them has not changed because the economy has weakened in Florida or stayed strong in Eastern Canada, said Visentin.
“It doesn’t make it any easier to acquire them, it just lowers the price. It is not easy because you are buying large tracts of land and all the different encumberances on the properties and things that you have to sort through. And you are dealing with one-off owners. They are all unique and it makes it challenging as well.”
ClubLink is majority-owned and controlled by Morguard Corp. CEO Rai Sahi who acquired a 25% share of the resort company in 2001 has raised that stake to about 70%.
The company is Canada's largest owner and operator of golf clubs with 53.5 18-hole equivalent championship and six 18-hole equivalent academy courses at 44 locations mainly in Ontario, Quebec and Florida. It also has interests in rail, tourism and port operations based in Skagway, Alaska.