A bombshell article has appeared in the Newcastle Herald newspaper, reporting that Retirement Village developer Aveo has purchased the Shortland Waters golf club for just $1.25 million.
As background, Shortland Waters recently entered into voluntary administration, unable to operate its club profitably or cover the decline in membership and loss of income during course redevelopment works. Those works were funded by the sale of part of the club’s land to Aveo for the construction of a retirement village. At the time the Aveo deal was regarded as a ‘rescue package’ for the struggling golf club.
The $8.5 million generated from the Aveo sale was used to construct an improved clubhouse and build six new holes as part of a reconfigured golf course. Those holes are due to be open for play shortly.
As part of its development arrangement, the Shortland Water Board had conceded Aveo a caveat on the entire property, which apparently prevented the club from then securing independent finance and staying afloat.
Members of the club told the Newcastle Herald they feel ‘dudded’ by Aveo’s cheap purchase price, although as part of the sale the developer will lease the course back to members for $1 a year for 20 years. Aveo have also agreed not to include any additional residential development on golf course land while the lease is in place. Almost half of the proceeds of the sale would be used by the club to pay off creditors.
With dozens of clubs Australia wide now entering into partnerships with aged-care providers and retirement developers, the whole sorry Shortland Waters saga should act as a warning that a sudden cash injection is not always a cure-all. Excess spending and over-enthusiasm are a constant risk for such golf clubs.
A prominent Hunter developer with detailed knowledge of the course’s value said the land next to Newcastle University had redevelopment potential.
He said $1.25 million was a “steal” and about 20 per cent of the land’s market value.
A former Shortland Waters club director said Aveo had “behaved as you would expect a developer to behave”.
“They had intimate knowledge of the club’s finances and have positioned themselves beautifully to take advantage of the club’s situation,” he said.
“Their offer of $1.25 million is grossly inadequate given that it includes the land area of an 18-hole golf course as well as a new $3 million clubhouse and car park.”
Club members and creditors, most of whom are club employees, voted last month to accept Aveo’s offer, which includes a 20-year lease for $1 a year and a buy-back option if members can find $3.5 million seven years from now.
Mr Freeman said there was a “great possibility” the club could be back in financial trouble in three years’ time if golfers did not return to the course.
“I think everybody’s aware of that,” he said.
Mr Freeman said Aveo had the club over a barrel.
“There was nothing we could do about it. We are disappointed with the offer, because anybody with any commonsense would know that’s a cheap buy, but we had no alternative.
“We had to accept the offer, otherwise it probably would have gone to public auction. A developer might have bought it and there might have been houses on it.”
by Darius Oliver
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