Fall 2014 www.GolfIncMagazine.com 5
golf’s slump continued due to a declining
base of players, which increased its perceived investment risk.
But two things changed the picture,
according to industry observers. First,
sales prices bottomed out as poor performing operators and private clubs were
forced to sell. That brought opportunistic
buyers into the market. But it still didn’t
convince Wall Street that golf was a good
The catalyst for that change seems to
have been ClubCorp going public in September of 2013. By doing so, it provided
transparency on financials, which has
helped other investors better grasp the
“The successful IPO of ClubCorp has
helped validate golf as a real estate sec-
tor,” said Jim Hinckley, CEO of Century
Golf Parnters and American Golf. “A
public company with good numbers gives
investors comparative data and validates
the sector. Prior to that, golf was kind of
a wild card.”
Joe Guerra, president and founder of
Sequoia Golf, said investors now under-
stand that golf is not falling off a cliff.
“There are good quality companies,
and we are proving the test of time and
doing well,” he said.
Guerra said the perception that golf
was struggling was based on clubs that
were grabbing the headlines because they
were poorly run and cratering financially.
“We have seen net growth in every clus-
ter for two years in a row,” Guerra said
of his company’s financial performance.
“Memberships are up and members are
playing more golf than they ever have.”
Guerra said ClubCorp’s acquisition of
his company is a reflection of the strength
of the private club market segment that
continues to thrive and grow.
Sequoia’s adjusted earnings before interest, taxes, depreciation, and amortization — or EBITDA — was $24.4 million
for the 12 months that ended on June 30.
Its revenue was $98.4 million, meaning it
was earning a 25 percent profit in a time
when many golf courses are struggling.
But the company had a high debt.
“This was a great opportunity for ClubCorp to buy at the bottom of the market
and ride the appreciation up and a good
opportunity for Joe Guerra to get rid of
the burden of a high debt load and recapitalize the portfolio,” said Ekovich.
Guerra founded Sequoia Golf with his
brother Ken in 2002 with funding from
Parthenon Capital. Sequoia’s first ac-
quisition was the $55 million purchase
of seven Canongate properties in south
Atlanta from the Patten Seed Company.
The company grew through acquisitions,
building tight clusters in Atlanta, Hous-
ton and most recently Denver.