by BRAD ROLLINS
The owner of Plum Creek Golf Club is fending off the threat of foreclosure after its bank was shut down by federal regulators and a new note-holder called in outstanding debts.
Arcadia, Missouri-based Middleton Properties bought the 18 hole, 195-acre course for $3 million from San Diego-based La Jolla Bank in March 2008 as part of a deal that included three other golf courses, Cypress Lake Golf Club in Houston and two properties in Indiana.
Given the property’s troubled history – La Jolla owned the course as the result of a previous foreclosure against former owner Mountain City Golf Inc. – Middleton negotiated a two-year grace period to bring the Kyle facility back into the black, said David Curwen, the club’s general manager and golf pro.
But in February, the Federal Deposit Insurance Corp. closed La Jolla, saying its “financial management had rapidly deteriorated” and that the bank risked failure because of “significant losses in its acquisition, development and construction loan portfolios,” an FDIC spokesperson said at the time. Pasadena, Calif.-based OneWest Bank entered into a “loss-share transaction” of $3.6 billion in assets, including Middleton’s four golf clubs.
Middleton Properties is trying to negotiate an arrangement for keeping the property and Curwen said he did not know if or when the bank will foreclose.
“I’d like to be able to predict the future but in these economic times, it’s just hard to say,” Curwen said. “…I don’t know where the negotiations are going to go and I don’t know what thinking process [the bank]uses. If they’re going to try to sell the course to recover the mortgage, it’s not going to get anything for them.”
Top-rated courses are idling on the market for less than $2 million, Curwen said, and it’s unlikely that the sale of Plum Creek would fetch anything approaching the $3 million Middleton paid for the property two years ago. The property is less valuable, he said, because it can only ever be used as a golf course because of deed restrictions, he said.
Traffic at Plum Creek held steady in 2010 at about 25,000 rounds, Curwen said, and Middleton has invested $2.1 million in improvements including construction of a 10,000-square-foot clubhouse that opened in August 2009 and extensive irrigation system improvements.
The course’s financial recovery, however, has been hampered by a glut of golf courses nationally, Curwen said.
“Golf courses got way overbuilt in the 80s and into the 90s and the market just doesn’t sustain it” during an economic downtown, Curwen said. “It’s a luxury. Once the economy starts dipping down, people start dropping luxuries.”