Report: Fortress Investments to Buy American Golf Corporation

The Santa Monica, Calif.-based management company, currently owned by an investor group headed by Goldman Sachs and Starwood Capital, will be acquired by the New York investment firm, according to a report in The Pellucid Perspective.

According to The Pellucid Perspective, a monthly digital magazine published by Pellucid Corp., Buffalo Grove, Ill., one of golf’s largest portfolios is expected to change hands soon, with the acquisition of Santa Monica, Calif.-based American Golf Corporation (AGC) by multi-tiered investment giant Fortress Investments.

American Golf, which was purchased by an investor group headed by Goldman Sachs and Starwood Capital from publicly traded REIT National Golf Properties in early 2003 for $1.1 billion, currently owns or leases just under 100 golf course properties, primarily concentrated in California, New York and several other key markets in the U.S.

While the deal has not closed yet, The Pellucid Perspective’s Editor-in-Chief, Jim Dunlap, reported that “reliable industry sources have confirmed that Fortress will take the reins at American Golf in the near future.” The current AGC management team, headed by CEO Paul Major and Chief Operations Officer Keith Brown, is expected to remain at the company’s helm after the acquisition is completed, it was noted.

No price has been announced for the Fortress acquisition, The Pellucid Perspective said in its report, but “it will likely be the largest golf-industry transaction since the 2006 sale of ClubCorp to KSL Capital Partners for a reported $1.8 billion.”

Fortress has been involved with American Golf for some time as a mezzanine lender for the company’s debt, The Pellucid Perspective reported, and had been mentioned as a possible suitor for AGC prior to the company’s purchase by Goldman Sachs and Starwood Capital.

At the time of its purchase by Goldman Sachs and Starwood, American Golf was the world’s largest owner/operator of golf course properties, with approximately 250 courses owned or leased worldwide. Over the past decade, the company has gradually pared its portfolio, selling a portfolio of nearly 30 courses in the United Kingdom and either declining to renew leases or selling properties outside of its target markets.

The company’s current courses, approximately 30 percent of which are AGC-owned and the rest primarily leased, are heavily concentrated in California by design, in addition to a long-term contract for operation of a number of publicly owned courses in the New York City metropolitan area, The Pellucid Perspective reported.

The AGC acquisition would be Fortress Investments’ largest foray into the golf industry, but not its first, The Pellucid Perspective’s report noted. Earlier this year, Fortress signed on as the financial backer for a new company formed by former ClubCorp and Pegasus Golf executive Blake Walker, Arcis Equity, which recently acquired several of the Brightstar Golf Group portfolio of courses.

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