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02/13/11
Desert Mountain Golf Club bought by members for $73.5 mil
Filed under: General, Real Estate
Posted by: Lillian Wong @ 1:49 pm

Desert Mountain Golf Club Desert Mountain Golf Club’s Cochise course opened in 1988. Club members recently purchased the club’s assets from Crescent Real Estate Holdings for $73.5 million.

Members of the exclusive Desert Mountain Golf Club in north Scottsdale have completed a deal with owner Crescent Real Estate Holdings to purchase the club’s six golf courses, all related facilities and about 500 acres of developable land for $73.5 million.

The deal expands on an agreement in the Desert Mountain membership contract that would have required members to buy the club’s six golf courses and clubhouse facilities on March 1.

Member representatives described the expanded deal as an insurance policy against future changes to the club and its surrounding community of multimillion-dollar homes.

Of particular concern, they said, was the large swath of adjacent land, which Crescent ultimately could have sold or developed for any number of residential or commercial projects.

Dave Kaplan, who lives in the Desert Mountain community and has been a member of the club since 1997, said he was not surprised that 99 percent of the members who voted on the purchase deal favored it. Of the roughly 2,300 members, 90 percent cast votes, the club’s managers say.

“I strongly supported Desert Mountain’s global asset purchase, which accelerated the turnover process and ensured the future of our community,” Kaplan said.

It’s no secret that dozens of high-end golf courses have struggled to remain private - or even stay open - in recent years.

Some have addressed the economic problem by opening the fairways to public play.

Superstition Mountain Golf and Country Club, near Gold Canyon in the far East Valley, is one of the area’s formerly private-only clubs that has been pursuing daily-fee golfers by opening up one of its two courses each day to non-members.

Country clubs Red Mountain Ranch in east Mesa, Moon Valley in north-central Phoenix, Corte Bella in Sun City West and Quintero near Lake Pleasant all have altered their policies in recent years to allow some limited use by non-members.

Desert Mountain members’ bigger concern, according to club President Bob Jones, was making sure the community’s vacant land would be developed for purposes that benefited the club and not just the property’s owner.

“They (Crescent) would have maintained control,” Jones said. “They could have sold the land to another developer.”

To make the deal work financially, Jones and other representatives of the buyers’ group obtained financing for a portion of the purchase price.

The upshot of that decision was that instead of each member paying an expected $50,000 over many years via fee increases, each member was assessed a one-time fee of $16,500, which Jones said would be the only contribution ever required of them.

He added that the group performed extensive due diligence before agreeing on the purchase price. The club has turned a profit every year since 2003, Jones said.

He said that the final negotiated price was about one-third of the seller’s original asking price.

“The developer was hoping to get over $200 million from this deal,” he said.

Kaplan said he and the other members knew in advance that they would have to contribute some cash, and that he did not consider the $16,500 a financial burden.

“I thought it was an amount that the majority of members were very comfortable with,” he said.



MORE ON THIS TOPIC

Desert Mountain Golf Club timeline

1986 - Desert Mountain is established in northeast Scottsdale.

1987 - Renegade, Desert Mountain’s first Jack Nicklaus-designed course, opens.

1988 - The club’s second course, Cochise, opens

1989 - The third course, Geronimo, opens.

1990 - The Cochise-Geronimo Clubhouse opens.

1993 - The Sonoran Clubhouse opens.

1996 - The fourth course, Apache, opens.

1997 - The Renegade Clubhouse opens.

1999 - The fifth course, Chiricahua, opens.

2003 - The sixth and final course, Outlaw, opens.

2010 - Members vote to purchase the club and related assets.

2011 - Ownership is transferred to club members.

Source: Desert Mountain Golf Club

by J. Craig Anderson The Arizona Republic Feb. 13, 2011 12:00 AM



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