Glossary of golf appraisal terms Championship: The term "championship" carries no universally accepted definition. It should refer to a course providing a superior challenge by virtue of the design and maintenance, where professional tournaments are, or could be, held. The term is often overused in referring to a basic regulation course. Equity club: This is a private club where the members own the property, usually by virtue of a physical stock certificate. However, some equity clubs issue only membership certificates that may or may not be transferable and refundable. The non-equity club simply grants members the rights to use the physical facilities for life or for a stated period of time. Furniture, fixtures and equipment (FF&E): These are personal property items that are an integral part of the operation of the property. Technically, "fixtures" refer to real estate, but the term is retained through entrenched use. Golf participation rate: The term refers to the percentage of the total population in a defined area age 5 and older who have played golf at least once within the survey year. Golf revenue multiplier (GRM): This is the unit of comparison used in the sales comparison approach. It's equal to the sale price divided by direct golf revenues (i.e., green fees, car fees and driving range). Internal rate of return (IRR): This term refers to the annualized rate of return on capital that is generated or capable of being generated within an investment or portfolio over the period of ownership. It's similar to the equity yield rate. The IRR is often used to measure profitability. It is the rate of discount that makes the net present value of an investment equal to zero. Market segmentation: This is the process of identifying groups of buyers with different purchasing desires or requirements. Net cash flow: This refers to the net operating cash flow plus proceeds of the reversion in the last year of a discounted cash-flow analysis. Replacement reserve: A replacement allowance provides for the periodic replacement of capital assets, including equipment and building components or golf course improvements that wear out rapidly. Equipment includes golf cars, course maintenance equipment, clubhouse and office equipment and, in some cases, vehicles. Building replacement components include short-lived items such as roof, carpet, drives and parking lots, and compressors. The annual allowance for each item is usually the anticipated cost of replacement prorated over the anticipated economic life of the item. Proration may be based on a simple average or provided for by the use of a sinking fund. The scope of items to be recovered by the replacement allowance is a matter of judgment. Reversion value: The term refers to a lump-sum benefit (sale of the property) that an investor receives at the termination of an investment. Sources: "Golf courses and country clubs, a guide to appraisal market analysis, development, and financing" by Arthur E. Gimmy, MAI, and Martin E. Benson, MAI, SGA, Appraisal Institute; and Golf Course Development and Real Estate, by Desmond Muirhead and Guy L. Rando, Urban Land Institute, Washington, D.C., 1994. |
