You would think that out of 120 golf clubs in the Myrtle Beach area, more than three would be private and that they would be spread along the 90-mile stretch of what is known as the Grand Strand. Yet three it is, and just 20 minutes between them on the south end of the Strand.

 

Privilege has its rank

        The three clubs are Wachesaw Plantation, a Tom Fazio designed course in Murrells Inlet; The Reserve Club of Pawleys Island,

located actually in Litchfield Beach and a Greg Norman design; and DeBordieu, one of only two Pete Dye designed courses on the Strand.  The other Dye layout, coincidentally, had a flirtation with privacy when it first opened but now is almost just as “public” as its three sister courses at the Barefort Resort in North Myrtle Beach.

        Wachesaw and DeBordieu rank #4 and #5, respectively, on the Grand Strand according to members of the South Carolina Golf Rating Panel, of which your editor is a recently named member.  (Statewide in golf-robust South Carolina, they rank #33 and #36.) The Dunes Club is rated #1 along the beach, and although it positions itself as a private club, it permits a fair amount of play for guests of local hotels. Everybody’s favorite, the public and expensive Caledonia Golf & Fish Club in Pawleys Island -– with $200 green fees in the peak season -- is ranked #2 on the Strand.

 

Plenty in Reserve

        The Greg Norman design at The Reserve is rarely mentioned in the same breath as the top courses of Myrtle Beach, but that could change within a few months.  The McConnell Golf Group, which has been on a buying binge of private golf clubs in recent years, purchased The Reserve during bankruptcy proceedings last April and is pumping seven-figures worth of investment into the course.  All the former bent grass greens are being replaced with a more heat-tolerant Bermuda hybrid, and the course’s copious bunkers are also being re-contoured and filled with a more contrasting white sand to provide badly needed eye appeal on the flat course. 

        If the turf conditions at The Reserve, which reopens in September, turn out anything like Musgrove Mill and Treyburn, two McConnell courses I played recently, McConnell should be able to not only reverse the negative flow of members, but also appeal to new members eager to have access the McConnell’s other five courses within a few hours.  (Note:  I am preparing an article for McConnell’s in-house magazine and will provide a link here when it is published and posted online.)

 

The approach to the 8th hole at the Tom Fazio-designed Wachesaw Plantation.

 

Private Clubs, Gated Communities

        The three private clubs in Myrtle Beach are behind manned gates just off Highway 17, the major north/south route along the Carolinas coast.  The Myrtle Beach area real estate market has cooled considerably.

  After years of steady increases, the last three years have brought drops of as much as 30% to many of the better communities in the area.  A 14-year old 3,400 square foot home in Wachesaw Plantation, with four bedrooms and 3 ½ baths is currently listed at $595,000 and features a fairway view, with a peak at the Waccamaw River in the distance.  In DeBordieu Colony, a five bedroom, 3 ½ bath home on the golf course with 3,500 heated square feet (4,500 “under the roof”) is listed at $597,500.  DeBordieu has its own private beach a short walk or bicycle ride from most homes inside the gates. And at The Reserve, a four bedroom, 2 ½ bath single-level home with 2,500 square feet is on the market for $520,000.  Through August, and while its golf course is closed for renovations, The Reserve is featuring a special $5,000 initiation fee offer.

        If you are interested in any of these communities or any of the dozens of other nice golf communities in the Myrtle Beach area, please contact me

and I will provide more information.

        A complaint filed in behalf of property owners at now bankrupt Florida golf communities Tesoro and Quail West and reported today at the web site GoToby.com alleges that Credit Suisse and controversial developer Bobby Ginn essentially colluded to provide the bank with enormous transaction fees and the developers with up-front profits, at the expense of investors in the properties.  Famed institutions like Harvard College and the MacArthur Foundation have been named as defendants in the complaint as well.

        According to the filing by Drew M. Dillworth, the Chapter 7 Trustee for the Tesoro & Quail West bankruptcies, Credit Suisse, the

Ginn Companies, Lubert-Adler (a limited partnership investment firm) and the many investors in Lubert, including universities, foundations and pension funds, engaged in the “fraudulent transfer” of more than $600 million.  The complaint alleges that after Hurricane Wilma in 2005, property sales in Ginn-Lubert-Adler-managed Florida communities, slowed to a trickle.  Revenues from property sales would have helped pay for the unbuilt amenities.

        Later, the lawsuit alleges, Credit Suisse and Ginn-Lubert-Adler arranged for the bank to provide $675 million in funds through a “new financial product” that gave the defendants in the suit an opportunity to take their profits up front by mortgaging their golf communities “to the hilt.”  Credit Suisse took $15 million in fees from the transfer, according to the complaint, and Ginn/Lubert-Adler split $323 million among themselves and their investors (including the universities, foundation and pension funds).  The remaining $158 million was used to replace third-party debt with new debt. 

        Meanwhile, the development’s property owners unknowingly wound up with all the risk.  The communities were “too thinly capitalized to survive” once the loans were made, according to the filing.  Other Ginn/Lubert-Adler projects in the “recapitalize and take profits” scheme, according to the complaint, were the Hammock Beach River Club and The Gardens in Palm Beach, FL; Laurelmor in the North Carolina mountains; and Ginn sur Mer in the Bahamas.  Yellowstone Mountain Club, the huge Montana community that also went bankrupt, is mentioned as an example of another development in which a similar Credit Suisse loan was used to the detriment of property owners there.

        According to the Tesoro and Quail West trustee’s complaint, less than a quarter of the total Credit Suisse loan was earmarked for capital developments

and the completion of amenities in the affected communities.  As “guaranty” for the loan, the developer granted liens on virtually all its existing assets which, the complaint alleges, “not only enriched themselves [Ginn and Lubert-Adler] and their investors at the expense of the Debtors [property owners] and Other Project Entities, [but also] effectively looted the Debtors and Other Project Entities and shifted the risks associated with the Projects to creditors, leaving those creditors with a virtual certainty of loss.”

        Ginn/Lubert-Adler filed Chapter 7 bankruptcy on the developments named in the filing in December 2008 after a series of defaults and attempts to restructure the loans, at which time Mr. Dillworth was named trustee by the U.S. Trustee Office.  Ginn/Lubert-Adler investors Harvard, the John D. and Catherine T. MacArthur Foundation as well as the University of Michigan, the Maryland State Retirement and Pension System, the Ohio Police and Fire Pension Fund, and the retirement systems for state employees and teachers in Pennsylvania received proceeds from the alleged fraudulent loan.

        The complaint also alleges that, in order to value the developments highly enough to qualify for the large Credit Suisse loan, real estate giant Cushman & Wakefield appraised the properties as if all lots had been developed and were ready for sale to builders “without deduction or discounting for pertinent risk factors or the time value of money.”  In effect, according to the filing, the appraisal significantly inflated the value of the Tesoro and Quail West projects.  Ginn/Lubert-Adler, the complaint alleges, provided Cushman & Wakefield with sales projections that had no basis in reality.

        Trustee Dillworth, of course, is asking for all loan transfers from Credit Suisse to Ginn/Lubert-Adler for Tesoro and Quail West, and payments to the developer’s investors to be recovered ("avoidance" is the legal term in the document).  This Ginn debacle may not have the overall impact of the credit default swap mess, but try telling that to the owners at Tesoro and Qual West.  For them, it’s personal.

        You can download a copy of the trustee’s complaint from GoToby.com.