Golf Trust of America: Better than Par for the Course


Golf Trust of America (GTA) has continued with its plan to clean-up its balance sheet of late through the planned liquidation of "Stonehedge," collectively representing the Country Clubs of Wildewood and Woodcreek Farms. The sale price of $4,100,000 allowed them to satisfy the revolving credit line of the same amount with Textron Financial Corporation, resulting in a $1,158,000 capital gain.

The balance sheet is cleaned-up significantly with cash constituing 90% of the $8,855,000 net tangible assets. Management statements reaffirm the commitment of the board to seek out new avenues to increase shareholder value and more than just lip service is being paid to this end. Mr. Vlahos followed through with the board's planned $500,000 share buyback on May 30th along with Mr. Gottlieb's addition to his position. A full 42% of the shares are held by insiders.

Having lost their Maryland REIT status a while back, the future is uncertain for GTA, but the balance sheet looks much better of late. Aside from the cash, they own a million dollar track of land acquired in a litigation settlement. The reality is that with the golfing world losing a third of its devotees between 2000-2005, 2,000,000 according to the New York Times, the demand appears to be waning, making the properties less valuable in a recessionary era where discretionary capital is ebbing across all income brackets.

This could serve as an opportunity for golf courses to be picked-up on the cheap in the anticipation of the excitement that may build with Tiger Woods climbing to beat Jack Nickelous' illustrious 18 major titles. As a result, golf may well enjoy a resurgence in popularity or better economic times might make hitting the course habitually more feasible.

Disclosure: No positions