Transaction Valued at $1.1 Billion
Press Release: National Golf Properties
September 17, 2002
SANTA MONICA, CA -- National Golf Properties (NYSE: TEE; "National Golf"), a real estate investment trust,
yesterday announced that its Board of Directors and its Independent Committee have approved the sale of the company
to an investor group comprised of Goldman Sachs' GS Capital Partners 2000, L.P., ("GS Capital Partners"),
Goldman Sachs' Whitehall Street Real Estate Fund 2001 ("Whitehall") and Starwood Capital Group's SOF
VI U.S. Holdings, LLC ("Starwood Capital"). GS Capital Partners, Whitehall, and Starwood Capital announced
that, in conjunction with the transaction, they will also purchase the outstanding equity interests of American
Golf Corporation ("American Golf"), a privately-held company that leases and operates nearly all of National
Golf's properties, and certain of its affiliates. The combined transaction is valued at $1.1 billion and includes
full repayment of all existing National Golf and American Golf indebtedness. The transaction is expected to close
in early 2003, subject to customary closing conditions including shareholder and regulatory approvals. Under the
agreement, National Golf shareholders and common unit holders will receive $12.00 per share in cash or per unit,
less any dividends or distributions paid prior to the closing of the transaction.
The companies will continue to own, lease or manage over 250 municipal, daily fee, resort and private golf courses
and clubs, with more than 50,000 members, primarily in the United States as well as in the United Kingdom, Australia,
and Japan. The companies will maintain a strong presence in highly desirable golf markets including Southern California,
the San Francisco Bay area, New York City, Atlanta, Hilton Head Island, Chicago, and Las Vegas.
"The Independent Committee is pleased to recommend this transaction to NGP's public shareholders. We believe
we have maximized shareholder value by conducting a thorough analysis of strategic alternatives and running a competitive
process," said Charles S. Paul, Chairman of the Independent Committee and Interim Chief Executive Officer
of National Golf.
"We are pleased to be buying the world's largest owner and operator of golf courses," said Henry Cornell,
Managing Director of Goldman Sachs. "This acquisition is consistent with our strategy of investing in companies
with leading industry positions. We look forward to working with the company's management team to continue to grow
the extraordinary platform they have created."
Merrick Kleeman, Senior Managing Director of Starwood Capital Group, added, "Given our history of investing
in and building golf and leisure related businesses, this acquisition is a compelling opportunity. The company
has assembled an unparalleled collection of assets and a talented and dedicated team that we believe is well positioned
to lead this industry into the future."
"We are very enthusiastic about this transaction and the quality of our new partners," said David Pillsbury,
President of American Golf. "Goldman Sachs' and Starwood Capital's financial strength, proven management expertise
and broad range of resources will be invaluable to our company and the properties we operate. We are confident
that these strengths, coupled with our team of highly experienced people and our diverse property portfolio, will
enable us to build a truly world-class organization."
David Price, Founder of both American Golf and National Golf, commented, "This is an exciting and important
next step in the evolution of the companies. I'm thrilled about all we have accomplished and look forward to many
great opportunities ahead."
After the transaction is completed, Mr. Price will become Chairman Emeritus and, along with other owners of American
Golf and the related entities that are being acquired, will receive for their interests in American Golf and these
entities total consideration of $10,000 in cash, two percent of the equity in National Golf and an option to acquire
two percent of the equity in American Golf. This replaces all of the consideration that these shareholders would
have received in the proposed merger with National Golf, including the Series C convertible preferred stock that
would have been convertible for up to 10 percent of the combined company's equity.
The Series A and B National Golf Preferred OP Units will remain outstanding and a portion of the Units will be
converted into a minority equity investment.
Goldman, Sachs & Co. served as financial advisor to GS Capital Partners and Whitehall. Lazard served as investment
banker to the Independent Committee of National Golf.
About National Golf and American Golf
National Golf is a publicly traded company REIT (specializing in the ownership of golf course properties). Its
portfolio consists of 116 golf courses at 104 facilities geographically diversified among 22 states. National Golf's
Web site can be accessed at http://www.nationalgolfproperties.com. The company is headquartered in Santa Monica,
CA.
American Golf is the largest operator of golf facilities in the world. The company employs over 17,000 people and
operates more than 250 private country clubs, destination golf resorts, daily fee and municipal golf courses, and
practice ranges in the United States, United Kingdom, Australia and Japan. American Golf's Web site can be accessed
at http://www.americangolf.com. The company is headquartered in Santa Monica, CA.
American Golf's public golf operations include numerous prestigious daily fee and resort properties. The company
is also the industry leader in improving and managing golf properties owned by governmental jurisdictions including
some of the largest cities, counties and park districts nationwide. In addition, the Company's American Golf Country
Clubs (AGCC) division -- dedicated exclusively to private club operations -- includes a portfolio of 65 private
clubs, and a membership base of over 50,000 members. Over the past several years, American Golf facilities have
hosted three USGA Amateur Championships and will host the 2003 U.S. Women's Open and the 2006 U.S. Senior Men's
Open at Pumpkin Ridge Golf Club in Portland, Oregon.
About Goldman Sachs, GS Capital Partners and Whitehall
Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a
wide range of services worldwide to a substantial and diversified client base that includes corporations, financial
institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest
investment banking firms. The firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo,
Hong Kong and other major financial centers around the world.
GS Capital Partners is the current primary investment vehicle of Goldman Sachs for making privately negotiated
equity investments. The current GS Capital Partners fund was formed in July 2000 with total committed capital of
$5.25 billion, $1.5 billion of which was committed by Goldman Sachs and its employees, with the remainder committed
by institutional and individual investors. Whitehall is the current primary investment vehicle of Goldman Sachs
for making privately negotiated real estate investments. The current Whitehall fund was formed in early 2001 with
total committed capital of $2.5 billion, $550 million of which was committed by Goldman Sachs and its employees,
with the remainder committed by institutional and individual investors.
About Starwood
Since its inception in 1991, Starwood Capital Group Global, LLC and its affiliates (collectively, "Starwood")
have raised over $2.5 billion of private and institutional capital for transactions representing over $7.5 billion
worth of real estate and related assets. Starwood has specialized in building operating companies around its core
real estate portfolios, including three of the nation's largest publicly held real estate companies: the recapitalization,
reorganization and expansion of a REIT in 1995 to become Starwood Hotels & Resorts Worldwide, Inc., a leading
global owner/operator of hotels with brands such as Sheraton, Westin, The St. Regis Luxury Collection and "W";
contributing a large mezzanine debt portfolio to create what is today iStar Financial, Inc., the nation's largest
publicly-owned finance company focused exclusively on commercial real estate; and helping to capitalize, at its
formation, Equity Residential Properties Trust, the nation's leading multifamily REIT.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation
Reform Act of 1995
This press release contains forward-looking statements within the meaning of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations
and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. These statements are not guarantees of future
performance, involve certain risks, uncertainties, and assumptions that are difficult to predict, and are based
upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ
materially from what is expressed herein. In any forward-looking statement in which National Golf expresses an
expectation or belief as to future results, such expectation or belief is expressed in good faith and believed
to have a reasonable basis, but there can be no assurance that the statement or expectation or belief will result
or be achieved or accomplished. The following factors, among others, could cause actual results to differ materially
from those described in the forward-looking statements: the risk that the various businesses will not be integrated
successfully; costs related to the proposed transaction; and other economic, business, competitive and/or regulatory
factors affecting National Golf's and American Golf's businesses generally, including those contained in National
Golf's reports with the SEC. National Golf is under no obligation to (and expressly disclaims any such obligation
to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
Additional Information
In connection with the proposed transaction with American Golf, National Golf and the new corporation will file
a proxy statement/prospectus with the Securities and Exchange Commission (the "SEC"). INVESTORS AND SECURITY
HOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the proxy
statement/prospectus (when it is available) and other documents filed by National Golf with the SEC at the SEC's
web site at http://www.sec.gov. The proxy statement/prospectus (when it is available) and these other documents
may also be obtained for free from National Golf by calling National Golf at (310) 664-4100, and through National
Golf's web site at http://www.nationalgolfproperties.com. National Golf and its directors, executive officers and
certain other members of management and employees may be soliciting proxies from its stockholders in favor of the
proposed transaction. Information regarding the persons who may, under the rules of the SEC, be considered to be
participants in the solicitation of National Golf's stockholders in connection with the proposed transaction is
set forth in National Golf's form 10K/A for the year ended December 31, 2001, dated April 30, 2002 and filed with
the SEC on April 30, 2002. Additional information will be set forth in the proxy statement/prospectus when it is
filed with the SEC.
Source: National Golf Properties