Big LV golfing operator sold

Monday, Sept. 16, 2002 | 11:13 a.m.

SUN STAFF AND WIRE REPORTS

SANTA MONICA, Calif. -- A Goldman Sachs Group Inc. fund and Starwood Capital Group agreed to buy National Golf Properties Inc., the largest publicly traded golf course owner, and an affiliate for $1.1 billion in cash and debt.

Goldman and Starwood will pay $12 for each share of National Golf, the Santa Monica, California-based REIT said today. The price is a 12 percent premium to National Golf's closing share price on Friday of $10.70. The investors will also repay an undisclosed amount of debt of National Golf and its affiliates.

The purchase includes American Golf Corp., a closely held company that manages most of National Golf's courses. The two own, manage or lease more than 250 courses in the United States, Britain, Australia and Japan, and share the same chairman, David Price.

In Southern Nevada, National and American own the Wildhorse, Painted Desert, Badlands, Desert Rose, Las Vegas Golf Club and Las Vegas National courses. National Golf's shares are down 58 percent since the middle of August 2001, when the REIT said American Golf's financial situation had deteriorated, triggering a technical default on both companies' debt. They blamed lower course and club fees because of bad weather, a glut of new courses and a slowing economy for the worsening results.

A plan to solve the financial problems by merging the two companies earlier this year was criticized by shareholders because it would have kept Price in charge, led to elimination of the dividend and saddled the REIT with the management business, which caused the problems.

National Golf's shares rose $1.05 to $11.75 at 9:41 a.m. today on the New York Stock Exchange.

As part of the sale to Goldman and Starwood, Price will become chairman emeritus and along with other owners of American Golf receive $10,000 in cash, a 2 percent stake in National Golf and an option to buy a 2 percent stake in American Golf.

Goldman is making the purchase through its GS Capital Partners 2000 LP and Whitehall Street Real Estate Fund 2001 funds. Starwood Capital is headed by Barry Sternlicht, who is also founder and chief executive of Starwood Hotels & Resorts Worldwide Inc., the owner of the Sheraton and Westin chains and the former owner of the Caesars casino brand.

The Goldman funds were advised by the firms' investment bank. Lazard LLC advised National Golf's independent committee of directors.