Plum Creek Development Partners

Client Situation

KMD Studley advised Plum Creek Development Partners (PCDP), the developers of the master-planned Plum Creek Community, on the purchase of the 207 acre Plum Creek Golf Course in Kyle, Texas at the Hays County foreclosure sale in March 2011. The lender had foreclosed on the property which had unpaid mortgage notes totaling $5.1M. KMD Studley worked with its client to shape a successful bid of $1.1M, a 78% discount on the notes. After the purchase, KMD Studley and PCDP identified a 17.76 acre developable tract that had been used as the course’s driving range. This property was then re-zoned for mixed-use development and PCDP retained KMD Studley to sell it.

Consideration Analysis

The 17.76 acres of dry land were carved out of the 207 total acres, which created a developable multi-family site, and the former driving range was repositioned to an area within the floodplain. KMD Studley sold the 17.76 acre tract to a multi-family developer in March 2013 for more than three times the purchase price of the entire 207 acre tract in 2011.

Result

The multi-family development tract sale represents only 8% of the 207 total acres purchased by PCDP at foreclosure. The sale of this tract alone gave PCDP an Internal Rate of Return (IRR) of 66.37% on a two year hold and the owners still retain the remaining 92% of the land and the improvements thereon. Shortly after PCDP acquired the course in 2011, KMD Studley recommended a new golf course operator and the Plum Creek Golf Course began generating profits.

As a result of KMD Studley’s successful recommendations on the original distressed purchase, and on the subsequent sale to the multifamily developer for a 350 plus unit “Market Rate” apartment project, PCDP awarded KMD Studley a mandate to sell an additional 16 acre multi-family development tract on the opposite side of the course. Having proven the viability of “Market Rate” product with the first sale, an efficient disposition of this golf course acreage for multi-family or senior living development is anticipated.

Summary Information

  • Property: Plum Creek Golf Course, Plum Creek, Texas
  • Transaction Size: 17.76 Acres
  • Transaction Type: Sale
  • Service Line: Industrial