<DOCUMENT>
<TYPE>EX-99.(C)(6)
<SEQUENCE>7
<FILENAME>dex99c6.txt
<DESCRIPTION>DUFF & PHELPS LLC'S DRAFT VALUATION ANALYSIS 08/22
<TEXT>
<PAGE>
Exhibit (c)(6)
--------------
DRAFT
DUFF & PHELPS, LLC
[X] 2029 CENTURY PARK EAST, SUITE 820 [X] LOS ANGELES, CA 90067 [X]
(310) 284-8008 [X] FAX (310) 284-8130
VALUATION ANALYSIS
OF
[GOTHAM LOGO]
GOTHAM GOLF PARTNERS, L.P.
August 21, 2001
THE INFORMATION CONTAINED HEREIN IS OF A CONFIDENTIAL NATURE AND IS
INTENDED FOR THE EXCLUSIVE USE OF THE PERSONS OR FIRM TO WHOM IT IS
FURNISHED BY US. REPRODUCTION, PUBLICATION, OR DISSEMINATION OF
PORTIONS HEREOF MAY NOT BE MADE WITHOUT PRIOR APPROVAL
OF DUFF & PHELPS, LLC.
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
TABLE OF CONTENTS
--------------------------------------------------------------------------------
I. SUMMARY OF ENGAGEMENT
II. GOTHAM GOLF PARTNERS - COMPANY OVERVIEW
III. VALUATION ASSUMPTIONS
IV. DISCOUNTED CASH FLOW ANALYSIS
A. PESSIMISTIC CASE - NO NEW COURSES, EXISTING OVERHEAD
B. BASE CASE - NO NEW COURSES, NORMALIZED OVERHEAD
C. OPTIMISTIC CASE - NEW COURSES - ROLL-UP STRATEGY
V. COMPARABLE PUBLIC COMPANY ANALYSIS
A. COMPARABLE PUBLIC COMPANY MULTIPLES / ANALYSIS
VI. NET ASSET VALUE ANALYSIS
VII. OTHER ASSETS
VIII. VALUATION SUMMARY
APPENDIX
A. DISCOUNT RATE ANALYSIS
B. SUMMARY OF DIFFERENCES BETWEEN D&P AND GGP DCF ANALYSIS
C. CAPITALIZATION RATE ANALYSIS
D. COMPARABLE PUBLIC COMPANY DESCRIPTIONS
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
SUMMARY OF PURPOSE
--------------------------------------------------------------------------------
PURPOSE OF ENGAGEMENT
[_] Duff & Phelps, LLC ("Duff & Phelps") has been retained by First Union Real
Estate Equity and Mortgage Investments ("First Union") as an independent
financial advisor to the Special Committee of the Board of Trustees of
First Union in connection with a contemplated transaction ("Proposed
Transaction").
[_] Duff & Phelps has been engaged to determine the fairness of the Proposed
Transaction from a financial point of view.
[_] As part of the fairness analysis, Duff & Phelps has determined the fair
market value of the capital stock of Gotham Golf Partners, L.P. ("GGP" or
the "Company"), on a controlling interest basis.
[_] The following presentation is Duff & Phelps' preliminary analysis and
opinion of fair market value of GGP.
DUE DILIGENCE
[_] Duff & Phelps has relied on the information provided by Gotham Partners
("GP") and the Company, without independent verification thereof. Duff &
Phelps assumed that the information provided fairly represents the results
of the operations and financial position of GGP. Due diligence activities
carried out as part of the valuation process include the following:
1. Visit to the Company's headquarters in Hershey, PA, and
interviews with GGP's management team, as follows:
Danny Mays - Chairman Andrew Bonus - Vice President
Jon Caporaletti - President Michael Armel - Vice President
Allen DePuy - Vice President William Leahy - Legal Counsel
Dan Stonionis - Vice President
2. Visit to the Company's selected golf courses, including:
Bear Creek Golf Club Lake Arbor Golf Club
The Bridges The Links at Challedon
Edgewood in the Pines Maple Ridge Golf Club
Fairfax National Golf Club Monroe Valley Golf Club
Four Seasons Golf Club Montgomery Country Club
Fox Hollow Golf Club Mountain Laurel Golf Club
Glade Valley Golf Club Robin Dale Golf Club
Greencastle Greens Golf Club Royal Oaks Golf Club
Honey Run Golf Club West Winds Golf Club
- 1 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
SUMMARY OF PURPOSE
--------------------------------------------------------------------------------
DUE DILIGENCE (CON'T.)
3. Interviews with William Ackman, CEO of GP and CEO of First Union.
4. Discussions with GGP's auditor, Freidkin, Matrone & Horne, P.A.
5. Review of internal financial statements for the fiscal years
ending December 31, 1998-2000; reviewed financial statements for
the fiscal year ending December 31, 1999; and audited financial
statements for the fiscal year ending December 31, 2000.
6. Review of projections prepared by GGP management for the fiscal
years ending December 31, 2001-2005.
7. Review of the Company's strategic business plan.
8. Review of other pertinent Company, industry and economic
information.
- 2 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
COMPANY OVERVIEW
--------------------------------------------------------------------------------
COMPANY OVERVIEW
[_] Gotham Golf Partners, L.P. is a full-service golf course acquisition,
ownership, and management company that owns and operates golf courses
throughout the Eastern United States.
[_] GGP specializes in acquiring and repositioning previously undercapitalized
and under-managed courses located in areas with favorable demographics.
[_] The Company currently maintains a portfolio of 26 golf courses, all of
which have been acquired over the past four years.
[_] Through its acquisition of 26 golf courses, the Company's management has
developed and refined a process for identifying attractive acquisitions,
implementing turn-around programs, and profitably managing its operations.
[_] The Company has built a seasoned management team, the core of which has
worked together for 11 years, with the capacity to manage significant
growth.
[_] GGP places a high level of fiscal responsibility with its on-site
management, staffing each property with an on-site manager who is
responsible for the operations and profitability of the golf course.
[_] By applying the disciplined oversight of experienced regional managers and
experience of the "hands-on" executive management team, GGP has been able
to produce and maintain consistently high operating margins.
[_] GGP applies a straightforward approach to golf management by investing
requisite capital immediately following an acquisition to increase quality
and promote round growth.
[_] GGP focuses on leveraging the benefits of portfolio size and geography to
manage courses efficiently and frequently eliminates or limits existing
membership programs to promote daily-fee play and reduce the need to
provide low margin services.
- 3 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
VALUATION ASSUMPTIONS
--------------------------------------------------------------------------------
VALUATION ASSUMPTIONS
[_] GGP has a high level of corporate overhead due to the fact that the Company
is implementing an aggressive roll-up of golf courses.
[_] If operations were to stay at the current level (26 courses), corporate
overhead could be reduced by over 50% to approximately $1.5 million, or 4%
of revenues.
[_] We employed a normalized level of corporate overhead at 4% of revenues in
the Base Case Discounted Cash Flow analysis and in the Comparable Public
Company analysis.
[_] We have assumed that GGP will purchase the 50% interests it does not
already own in California Golf, L.C. and Miami National Golf Club, L.C. for
$1.35 million, prior to the close of the Proposed Transaction. The purchase
price has been included in total debt.
[_] In our valuation analysis, we have capitalized net operating income ("NOI")
instead of course operating income ("COI"), which is the level of income
GGP uses to capitalize. NOI is derived by deducting a maintenance level of
capital expenditures (2% of revenues) and cart lease expenses ($1.8
million) from COI. NOI is, therefore, a lower, more conservative level to
capitalize. Based on our research, most capitalization rates are based on
NOI.
[_] We have relied, without independent verification, on management's
representation of the fair market value of other assets. The total value of
other assets is $8.1 million. The value of other assets included as part of
the Proposed Transaction was estimated at $3.2 million.
- 4 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
DISCOUNTED CASH FLOW ANALYSIS
--------------------------------------------------------------------------------
[_] The Discounted Cash Flow Approach
. Based on the theory that the current value of an investment is
based on the expected receipt of future economic benefits.
. Indications of value are developed by discounting projected
debt-free net cash flows to their present value at a rate that
reflects both the current return requirements of the market and
the risks inherent in the specific investment.
. The present value of these cash flows represents the invested
capital value (debt plus equity) of a company. Deducting
interest-bearing debt from the indicated enterprise value results
in an indication of total equity value for the subject company.
[_] Primary Components to Value in Using the Discounted Cash Flow approach
. The present value of interim cash flows plus the present value of
the terminal value (i.e., value at the end of the projection
period).
. Terminal value, or continuing value of operations beyond the last
projection year, was determined by capitalizing the terminal year
net operating income.
[_] Determination of an Appropriate Discount Rate
. The rate of return an investor would require to invest in GGP was
the primary consideration in selecting a discount rate.
. Alternate investment opportunities with varying risk profiles
were considered and compared to the risk of an equity investment
in GGP.
. Capital Asset Pricing Model, the Cost of Equity and alternative
investments were considered in determining appropriate discount
rates.
[_] Three Scenarios Analyzed
. Pessimistic Case
. No growth in the number of courses
. Corporate overhead is not reduced
. Valuation conclusion: $26.6 million to $31.5 million
- 5 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
DISCOUNTED CASH FLOW ANALYSIS
--------------------------------------------------------------------------------
[_] Three Scenarios Analyzed (con't)
. Base Case
. No growth in the number of courses
. Normalized corporate overhead - 4.0% of revenues
. Valuation conclusion: $32.9 million to $38.0 million
. Optimistic Case
. Roll-out strategy of 5 additional courses per year,
starting in 2002
. No adjustments to corporate overhead
. Valuation conclusion: $55.4 million to $70.3 million
- 6 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (PESSIMISTIC CASE -
NO NEW COURSES, EXISTING CORPORATE OVERHEAD)
Income Statement Summary
<TABLE>
<CAPTION>
--------------------------------------------------------------
ACTUAL PROJECTED
FOR FYE DECEMBER 31, 1998 1999 2000 2001
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Revenue 19,141,556 25,537,488 30,444,714 35,678,706
Less: Cost of Sales and Operating Expenses 10,918,565 13,169,431 16,910,414 18,146,053
-------------------------------------------------------------
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894
Less: Cart Lease Expense 946,404 1,263,612 1,461,992 1,703,612
Less: Corporate Overhead 1,911,158 2,973,506 3,275,833 4,136,242
--------------------------------------------------------------
Debt-free Pretax Income NA (282,310) (1,631,582) 500,905
Less: Pro-forma Income Taxes at 40% NA 0 0 200,362
--------------------------------------------------------------
Debt-free Net Income NA (282,310) (1,631,582) 300,543
==============================================================
Debt-free Net Income NA (282,310) (1,631,582) 300,543
Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894
Maintenance Capital Expenditures NA NA NA (713,574)
Hawk Lake Additional Development Cost NA NA NA (800,000)
--------------------------------------------------------------
Debt-free Cash Flow NA NA NA 9,978,863
==============================================================
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653
Less: Cart Lease Expense (946,404) (1,263,612) (1,461,992) (1,703,612)
Less: Maintenance Capital Expenditures NA NA NA (713,574)
--------------------------------------------------------------
Net Operating Income (NOI) NA NA NA 15,115,467
<CAPTION>
------------------------------------------------------------
PROJECTED
2002 2003 2004 2005
------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Revenue 38,044,612 39,267,877 40,467,414 41,735,390
Less: Cost of Sales and Operating Expenses 19,122,085 19,521,046 19,920,687 20,317,849
--------------------------------------------------------------
Course Operating Income (COI) 18,922,526 19,746,831 20,546,727 21,417,541
Less: Depreciation and Amortization 11,265,617 11,342,929 11,422,665 11,504,867
Less: Cart Lease Expense 1,737,684 1,772,438 1,807,887 1,844,044
Less: Corporate Overhead 4,343,054 4,560,207 4,788,217 5,027,628
--------------------------------------------------------------
Debt-free Pretax Income 1,576,171 2,071,257 2,527,959 3,041,001
Less: Pro-forma Income Taxes at 40% 630,468 828,503 1,011,183 1,216,400
--------------------------------------------------------------
Debt-free Net Income 945,703 1,242,754 1,516,775 1,824,601
==============================================================
Debt-free Net Income 945,703 1,242,754 1,516,775 1,824,601
Depreciation and Amortization 11,265,617 11,342,929 11,422,665 11,504,867
Maintenance Capital Expenditures (760,892) (785,358) (809,348) (834,708)
Hawk Lake Additional Development Cost 0 0 0 0
--------------------------------------------------------------
Debt-free Cash Flow 11,450,427 11,800,326 12,130,092 12,494,760
==============================================================
Course Operating Income (COI) 18,922,526 19,746,831 20,546,727 21,417,541
Less: Cart Lease Expense (1,737,684) (1,772,438) (1,807,887) (1,844,044)
Less: Maintenance Capital Expenditures (760,892) (785,358) (809,348) (834,708)
--------------------------------------------------------------
Net Operating Income (NOI) 16,423,950 17,189,036 17,929,492 18,738,789
</TABLE>
- 7 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (PESSIMISTIC CASE -
NO NEW COURSES, EXISTING CORPORATE OVERHEAD)
Valuation Summary
<TABLE>
<S> <C> <C> <C>
Weighted Average Cost of Capital 12.5% 12.0% 11.5%
----------------------------------------------------
Terminal Year Capitalization of NOI
----------------------------------------------------
Continuing Value (2005) Based on NOI Cap Rate of 11.0% 170,352,625 170,352,625 170,352,625
Present Value of Continuing Value 100,268,029 102,298,138 104,378,711
Present Value of Interim Debt-free Cash Flow 40,666,296 41,055,403 41,451,302
----------------------------------------------------
Enterprise Value Indication (rounded) 140,900,000 143,400,000 145,800,000
Less: Total Debt as of 4/1/01 (119,825,333) (119,825,333) (119,825,333)
Plus: Other Assets 3,155,000 3,155,000 3,155,000
Plus: Cash & Equivalents (clubs only as of 4/31/01) 2,363,225 2,363,225 2,363,225
----------------------------------------------------
Equity Value Indication (rounded) 26,592,892 29,092,892 31,492,892
<CAPTION>
-------------------------------------------------------------
FOR FYE DECEMBER 31, 2001 2002 2003 2004
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Discount Period 0.25 1.00 2.00 3.00
Present Value of Interim Period Debt-free Cash Flows @ 12.5% 4,844,656 10,178,158 9,323,714 8,519,351
Present Value of Interim Period Debt-free Cash Flows @ 12.0% 4,850,054 10,223,596 9,407,148 8,633,960
Present Value of Interim Period Debt-free Cash Flows @ 11.5% 4,855,482 10,269,442 9,491,706 8,750,633
<CAPTION>
----------------------------
FOR FYE DECEMBER 31, 2005 TOTAL
----------------------------
<S> <C> <C>
Discount Period 4.00
Present Value of Interim Period Debt-free Cash Flows @ 12.5% 7,800,417 40,666,296
Present Value of Interim Period Debt-free Cash Flows @ 12.0% 7,940,646 41,055,403
Present Value of Interim Period Debt-free Cash Flows @ 11.5% 8,084,040 41,451,302
</TABLE>
- 8 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (PESSIMISTIC CASE -
NO NEW COURSES, EXISTING CORPORATE OVERHEAD)
Assumptions
<TABLE>
<CAPTION>
--------------------------------------------------------------
ACTUAL PROJECTED
For FYE December 31, 1998 1999 2000 2001
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT ASSUMPTIONS
Rounds Played 572,387 717,038 839,339 973,730
Average Revenue per Round 33.44 35.62 36.27 36.64
Increase in Rounds Played NA 25.3% 17.1% 16.0%
Increase in Revenue per Round NA 6.5% 1.8% 1.0%
Cost of Sales and Operating Expenses as
a % of Revenue 57.0% 51.6% 55.5% 50.9%
Cart Lease Expense as a % of Revenue 4.9% 4.9% 4.8% 4.8%
Cart Lease Expense Growth NA 33.5% 15.7% 15.7%
COI Margin 43.0% 48.4% 44.5% 49.1%
COI Growth NA 50.4% 9.4% 29.5%
Corporate Overhead as a % of Revenue 10.0% 11.6% 10.8% 11.6%
EBITDA NA 8,130,939 8,796,475 11,692,799
EBITDA Margin NA 31.8% 28.9% 32.8%
EBITDA Growth NA NA 8.2% 32.9%
BALANCE SHEET ASSUMPTIONS
Beginning Original Fixed Assets (excluding land) NA NA 64,400,735 83,615,407
Plus: CapEx NA 15,273,770 27,514,313 0
Less: Assets Sold NA 94,813 3,837,150 0
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,156,215
Plus: Adjustment NA NA 5,965,566 0
--------------------------------------------------------------
Ending Original Fixed Assets (excluding land) NA 64,400,735 83,615,407 72,459,192
Remaining Years of Life (Original Fixed Assets) 7.5 years
-----------------------------------------------------------------------------------------------------------------
New Maintenance CapEx 713,574
-----------------------------------------------------------------------------------------------------------------
Depreciation of 2001 CapEx 10.0 years 35,679
Depreciation of 2002 CapEx 10.0 years
Depreciation of 2003 CapEx 10.0 years
Depreciation of 2004 CapEx 10.0 years
Depreciation of 2005 CapEx 10.0 years
-----------------------------------------------------------------------------------------------------------------
New CapEx Depreciation 35,679
-----------------------------------------------------------------------------------------------------------------
Total Depreciation and Amortization 8,413,249 10,428,057 11,191,894
Maintenance CapEx as a % of Revenue NA NA NA 2.0%
<CAPTION>
--------------------------------------------------------------
PROJECTED
For FYE December 31, 2002 2003 2004 2005
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT ASSUMPTIONS
Rounds Played 1,027,168 1,046,201 1,064,334 1,083,311
Average Revenue per Round 37.04 37.53 38.02 38.53
Increase in Rounds Played 5.5% 1.9% 1.7% 1.8%
Increase in Revenue per Round 1.1% 1.3% 1.3% 1.3%
Cost of Sales and Operating Expenses as
a % of Revenue 50.3% 49.7% 49.2% 48.7%
Cart Lease Expense as a % of Revenue 4.8% 4.8% 4.8% 4.8%
Cart Lease Expense Growth 2.0% 2.0% 2.0% 2.0%
COI Margin 49.7% 50.3% 50.8% 51.3%
COI Growth 7.9% 4.4% 4.1% 4.2%
Corporate Overhead as a % of Revenue 11.4% 11.6% 11.8% 12.0%
EBITDA 12,841,788 3,414,186 13,950,623 14,545,869
EBITDA Margin 33.8% 34.2% 34.5% 34.9%
EBITDA Growth 9.8% 4.5% 4.0% 4.3%
BALANCE SHEET ASSUMPTIONS
Beginning Original Fixed Assets (excluding land) 72,459,192 61,302,977 50,146,762 38,990,548
Plus: CapEx 0 0 0 0
Less: Assets Sold 0 0 0 0
Less: Depreciation and Amortization 11,156,215 11,156,215 11,156,215 11,156,215
Plus: Adjustment 0 0 0 0
--------------------------------------------------------------
Ending Original Fixed Assets (excluding land) 61,302,977 50,146,762 38,990,548 27,834,333
Remaining Years of Life (Original Fixed Assets)
-----------------------------------------------------------------------------------------------------------------
New Maintenance CapEx 760,892 785,358 809,348 834,708
-----------------------------------------------------------------------------------------------------------------
Depreciation of 2001 CapEx 71,357 71,357 71,357 71,357
Depreciation of 2002 CapEx 38,045 76,089 76,089 76,089
Depreciation of 2003 CapEx 39,268 78,536 78,536
Depreciation of 2004 CapEx 40,467 80,935
Depreciation of 2005 CapEx 41,735
-----------------------------------------------------------------------------------------------------------------
New CapEx Depreciation 109,402 186,715 266,450 348,653
-----------------------------------------------------------------------------------------------------------------
Total Depreciation and Amortization 1,265,617 1,342,929 11,422,665 11,504,867
Maintenance CapEx as a % of Revenue 2.0% 2.0% 2.0% 2.0%
</TABLE>
- 9 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (BASE CASE -
NO NEW COURSES, NORMALIZED CORPORATE OVERHEAD)
Income Statement Summary
<TABLE>
<CAPTION>
--------------------------------------------------------------
ACTUAL PROJECTED
For FYE December 31, 1998 1999 2000 2001
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Revenue 19,141,556 25,537,498 30,444,714 35,678,706
Less: Cost of Sales and Operating Expenses 10,918,565 13,169,431 16,910,414 18,146,053
--------------------------------------------------------------
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894
Less: Cart Lease Expense 946,404 1,263,612 1,461,992 1,703,612
Less: Corporate Overhead 1,911,158 2,973,506 3,275,833 1,427,148
--------------------------------------------------------------
Debt-free Pretax Income NA (282,310) (1,631,582) 3,209,999
Less: Pro-forma Income Taxes at 40% NA 0 0 1,284,000
--------------------------------------------------------------
Debt-free Net Income NA (282,310) (1,631,582) 1,926,000
==============================================================
Debt-free Net Income NA (282,310) (1,631,582) 1,926,000
Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894
Maintenance Capital Expenditures NA NA NA (713,574)
Hawk Lake Additional Development Cost NA NA NA (800,000)
--------------------------------------------------------------
Debt-free Cash Flow NA NA NA 11,604,319
==============================================================
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653
Less: Cart Lease Expense (946,404) (1,263,612) (1,46l,922) (1,703,612)
Less: Maintenance Capital Expenditures NA NA NA (713,574)
--------------------------------------------------------------
Net Operating Income (NOI) NA NA NA 15,115,467
<CAPTION>
--------------------------------------------------------------
PROJECTED
For FYE December 31, 2002 2003 2004 2005
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Revenue 38,044,612 39,267,877 40,467,414 41,735,390
Less: Cost of Sales and Operating Expenses 19,122,085 19,521,046 19,920,687 20,317,849
---------------------------------------------------------------
Course Operating Income (COI) 18,922,526 19,746,831 20,546,727 21,417,541
Less: Depreciation and Amortization 11,265,617 11,342,929 11,422,665 11,504,867
Less: Cart Lease Expense 1,737,684 1,772,438 1,807,887 1,844,044
Less: Corporate Overhead 1,521,784 1,570,715 1,618,697 1,669,416
---------------------------------------------------------------
Debt-free Pretax Income 4,397,441 5,060,749 5,697,479 6,399,214
Less: Pro-forma Income Taxes at 40% 1,758,976 2,024,299 2,278,992 2,559,685
--------------------------------------------------------------
Debt-free Net Income 2,638,464 3,036,449 3,418,487 3,839,528
==============================================================
Debt-free Net Income 2,638,464 3,036,449 3,418,487 3,839,528
Depreciation and Amortization 11,265,617 11,342,929 11,422,665 11,504,867
Maintenance Capital Expenditures (760,892) (785,358) (809,348) (834,708)
Hawk Lake Additional Development Cost 0 0 0 0
--------------------------------------------------------------
Debt-free Cash Flow 13,143,189 13,594,021 14,031,804 14,509,688
==============================================================
Course Operating Income (COI) 18,922,526 19,746,831 20,546,727 21,417,541
Less: Cart Lease Expense (1,737,684) (1,772,438) (1,807,887) (1,844,044)
Less: Maintenance Capital Expenditures (760,892) (785,358) (809,348) (834,708)
--------------------------------------------------------------
Net Operating Income (NOI) 16,423,950 17,189,036 17,929,492 18,738,789
</TABLE>
- 10 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (BASE CASE -
NO NEW COURSES, NORMALIZED CORPORATE OVERHEAD)
Valuation Summary
<TABLE>
<S> <C> <C> <C>
Weighted Average Cost of Capital 12.5% 12.0% 11.5%
------------------------------------------------
Terminal Year Capitalization of NOI
------------------------------------------------
Continuing Value (2005) Based on NOI Cap Rate of 11.0% 170,352,625 170,352,625 170,352,625
Present Value of Continuing Value 100,268,029 102,298,138 104,378,711
Present Value of Interim Debt-free Cash Flow 46,970,902 47,420,869 47,878,699
--------------------------------------------
Enterprise Value Indication (rounded) 147,200,000 149,700,000 152,300,000
Less: Total Debt as of 4/l/01 (119,825,333) (119,825,333) (119,825,333)
Plus: Other Assets 3,155,000 3,155,000 3,155,000
Plus: Cash & Equivalents (clubs only as of 4/31/01) 2,363,225 2,363,225 2,363,225
--------------------------------------------
Equity Value Indication (rounded) 32,892,892 35,392,892 37,992,892
<CAPTION>
-----------------------------------------------------------------
FOR FYE DECEMBER 31, 2001 2002 2003 2004
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Discount Period 0.25 1.00 2.00 3.00
Present Value of Interim Period Debt-free Cash Flows @ 12.5% 5,633,801 11,682,835 10,740,955 9,854,984
Present Value of Interim Period Debt-free Cash Flows @ 12.0% 5,640,079 11,734,990 10,837,070 9,987,561
Present Value of Interim Period Debt-free Cash Flows @ 11.5% 5,646,391 11,787,613 10,934,482 10,122,526
<CAPTION>
------------------------------------
FOR FYE DECEMBER 31, 2005 TOTAL
------------------------------------
<S> <C> <C> <C>
Discount Period 4.00
Present Value of Interim Period Debt-free Cash Flows @ 12.5% 9,058,327 46,970,902
Present Value of Interim Period Debt-free Cash Flows @ 12.0% 9,221,169 47,420,869
Present Value of Interim Period Debt-free Cash Flows @ 11.5% 9,387,687 47,878,699
</TABLE>
- 11 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (BASE CASE -
NO NEW COURSES, NORMALIZED CORPORATE OVERHEAD)
Assumptions
<TABLE>
<CAPTION>
---------------------------------------------------------------
ACTUAL PROJECTED
For FYE December 31, 1998 1999 2000 2001
---------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT ASSUMPTIONS
Rounds Played 572,387 717,038 839,339 973,730
Average Revenue per Round 33.44 35.62 36.27 36.64
Increase in Rounds Played NA 25.3% 17.1% 16.0%
Increase in Revenue per Round NA 6.5% 1.8% 1.0%
Cost of Sales and Operating Expenses as a %
of Revenue 57.0% 51.6% 55.5% 50.9%
Cart Lease Expense as a % of Revenue 4.9% 4.9% 4.8% 4.8%
Cart Lease Expense Growth NA 33.5% 15.7% 15.7%
COI Margin 43.0% 48.4% 44.5% 49.1%
COI Growth NA 50.4% 9.4% 29.5%
Corporate Overhead as a % of Revenue 10.0% 11.6% 10.8% 4.0%
EBITDA NA 8,130,939 8,796,475 14,401,893
EBITDA Margin NA 31.8% 28.9% 40.4%
EBITDA Growth NA NA 8.2% 63.7%
BALANCE SHEET ASSUMPTIONS
Beginning Original Fixed Assets (excluding land) NA NA 64,400,735 83,615,407
Plus: CapEx NA 15,273,770 27,514,313 0
Less: Assets Sold NA 94,813 3,837,150 0
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,156,215
Plus: Adjustment NA NA 5,965,566 0
--------------------------------------------------------------
Ending Original Fixed Assets (excluding land) NA 64,400,735 83,615,407 72,459,192
Remaining Years of Life (Original Fixed Assets) 7.5 years
--------------------------------------------------------------
New Maintenance CapEx 713,574
--------------------------------------------------------------
Depreciation of 2001 CapEx 10.0 years 35,679
Depreciation of 2002 CapEx 10.0 years
Depreciation of 2003 CapEx 10.0 years
Depreciation of 2004 CapEx 10.0 years
Depreciation of 2005 CapEx 10.0 years
--------------------------------------------------------------
New CapEx Depreciation 35,679
--------------------------------------------------------------
Total Depreciation and Amortization 8,413,249 10,428,057 11,191,894
Maintenance CapEx as a % of Revenue NA NA NA 2.0%
<CAPTION>
--------------------------------------------------------------
PROJECTED
For FYE December 31, 2002 2003 2004 2005
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT ASSUMPTIONS
Rounds Played 1,027,168 1,046,201 1,064,334 1,083,311
Average Revenue per Round 37.04 37.53 38.02 38.53
Increase in Rounds Played 5.5% 1.9% 1.7% 1.8%
Increase in Revenue per Round 1.1% 1.3% 1.3% 1.3%
Cost of Sales and Operating Expenses as a %
of Revenue 50.3% 49.7% 49.2% 48.7%
Cart Lease Expense as a % of Revenue 4.8% 4.8% 4.8% 4.8%
Cart Lease Expense Growth 2.0% 2.0% 2.0% 2.0%
COI Margin 49.7% 50.3% 50.8% 51.3%
COI Growth 7.9% 4.4% 4.1% 4.2%
Corporate Overhead as a % of Revenue 4.0% 4.0% 4.0% 4.0%
EBITDA 15,663,057 16,403,678 17,120,144 17,904,081
EBITDA Margin 41.2% 41.8% 42.3% 42.9%
EBITDA Growth 8.8% 4.7% 4.4% 4.6%
BALANCE SHEET ASSUMPTIONS
Beginning Original Fixed Assets (excluding land) 72,459,192 61,302,977 50,146,762 38,990,548
Plus: CapEx 0 0 0 0
Less: Assets Sold 0 0 0 0
Less: Depreciation and Amortization 11,156,215 11,156,215 11,156,215 11,156,215
Plus: Adjustment 0 0 0 0
--------------------------------------------------------------
Ending Original Fixed Assets (excluding land) 61,302,977 50,146,762 38,990,548 27,834,333
Remaining Years of Life (Original Fixed Assets)
--------------------------------------------------------------
New Maintenance CapEx 760,892 785,358 809,348 834,708
--------------------------------------------------------------
Depreciation of 2001 CapEx 71,357 71,357 71,357 71,357
Depreciation of 2002 CapEx 38,045 76,089 76,089 76,089
Depreciation of 2003 CapEx 39,268 78,536 78,536
Depreciation of 2004 CapEx 40,467 80,935
Depreciation of 2005 CapEx 41,735
--------------------------------------------------------------
New CapEx Depreciation 109,402 186,715 266,450 348,653
--------------------------------------------------------------
Total Depreciation and Amortization 11,265,617 11,342,929 11,422,665 11,504,867
Maintenance CapEx as a % of Revenue 2.0% 2.0% 2.0% 2.0%
</TABLE>
- 12 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (OPTIMISTIC CASE -
NEW COURSES, ROLL-UP STRATEGY)
Income Statement Summary
<TABLE>
<CAPTION>
--------------------------------------------------------------
ACTUAL PROJECTED
For FYE December 31, 1998 1999 2000 2001
--------------------------------------------------------------
<S> <C> <C> <C> <C>
# New Courses 0
Total Revenue 19,141,556 25,537,488 30,444,714 35,678,706
Less: Cost of Sales and Operating Expenses 10,918,565 13,169,431 16,910,414 18,146,053
--------------------------------------------------------------
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894
Less: Cart Lease Expense 946,404 1,263,612 1,461,992 1,703,612
Less: Corporate Overhead 1,911,158 2,973,506 3,275,833 4,136,242
--------------------------------------------------------------
Debt-free Pretax Income NA (282,310) (1,631,582) 500,905
Less: Pro-forma Income Taxes at 40% NA 0 0 200,362
--------------------------------------------------------------
Debt-free Net Income NA (282,310) (1,631,582) 300,543
==============================================================
Debt-free Net Income NA (282,310) (1,631,582) 300,543
Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894
New Course Acquisition Cost NA NA NA 0
Maintenance Capital Expenditures NA NA NA (713,574)
Additional Development Cost Existing Courses NA NA NA 0
--------------------------------------------------------------
Debt-free Cash Flow NA NA NA 10,778,863
==============================================================
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653
Less: Cart Lease Expense (946,404) (1,263,612) (1,461,992) (1,703,612)
Less: Maintenance Capital Expenditures NA NA NA (713,574)
--------------------------------------------------------------
Net Operating Income (NOI) NA NA NA 15,115,467
<CAPTION>
--------------------------------------------------------------
PROJECTED
For FYE December 31, 2002 2003 2004 2005
--------------------------------------------------------------
<S> <C> <C> <C> <C>
# New Courses 5 5 5 5
Total Revenue 42,770,829 52,911,711 64,848,441 76,872,709
Less: Cost of Sales and Operating Expenses 21,394,505 26,107,843 31,567,472 36,957,624
--------------------------------------------------------------
Course Operating Income (COI) 21,376,324 26,803,868 33,280,969 39,915,085
Less: Depreciation and Amortization 11,490,343 12,026,026 12,583,786 13,165,507
Less: Cart Lease Expense 1,866,112 2,191,112 2,516,112 2,841,112
Less: Corporate Overhead 4,343,054 4,560,207 4,799,142 5,107,667
--------------------------------------------------------------
Debt-free Pretax Income 3,676,815 8,026,523 13,381,929 18,800,799
Less: Pro-forma Income Taxes at 40% 1,470,726 3,210,609 5,352,772 7,520,320
--------------------------------------------------------------
Debt-free Net Income 2,206,089 4,815,914 8,029,158 11,280,479
==============================================================
Debt-free Net Income 2,206,089 4,815,914 8,029,158 11,280,479
Depreciation and Amortization 11,490,343 12,026,026 12,583,786 13,165,507
New Course Acquisition Cost (22,000,000) (22,000,000) (22,000,000) (22,000,000)
Maintenance Capital Expenditures (855,417) (1,058,234) (1,296,969) (1,537,454)
Additional Development Cost Existing Courses (4,950,000) (3,850,000) 0 0
--------------------------------------------------------------
Debt-free Cash Flow (14,108,985) (10,066,295) (2,684,026) 908,532
==============================================================
Course Operating Income (COI) 21,376,324 26,803,868 33,280,969 39,915,085
Less: Cart Lease Expense (1,866,112) (2,191,112) (2,516,112) (2,841,112)
Less: Maintenance Capital Expenditures (855,417) (1,058,234) (1,296,969) (1,537,454)
--------------------------------------------------------------
Net Operating Income (NOI) 18,654,795 23,554,522 29,467,888 35,536,519
</TABLE>
- 13 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (OPTIMISTIC CASE -
NEW COURSES, ROLL-UP STRATEGY)
Valuation Summary
<TABLE>
<S> <C> <C> <C>
Weighted Average Cost of Capital 14.0% 13.0% 12.0%
------------------------------------------------
Terminal Year Capitalization of NOI
------------------------------------------------
Continuing Value (2005) Based on NOI Cap Rate of 11.0% 335,204,717 335,204,717 335,204,717
Present Value of Continuing Value 185,882,408 193,400,292 201,293,161
Present Value of Interim Debt-free Cash Flow (16,179,956) (16,444,906) (16,716,264)
------------------------------------------------
Enterprise Value Indication (rounded) 169,700,000 177,000,000 184,600,000
Less: Total Debt as of 4/l/01 (119,825,333) (119,825,333) (119,825,333)
Plus: Other Assets 3,155,000 3,155,000 3,155,000
Plus: Cash & Equivalents 2,363,225 2,363,225 2,363,225
------------------------------------------------
Equity Value Indication (rounded) 55,392,892 62,692,892 70,292,892
<CAPTION>
----------------------------------------------------------
For FYE December 31, 2001 2002 2003 2004
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Discount Period 0.25 1.00 2.00 3.00
Present Value of Interim Period Debt-free Cash Flows @ 14.0% 5,215,750 (12,376,302) (7,745,687) (1,811,641)
Present Value of Interim Period Debt-free Cash Flows @ 13.0% 5,227,251 (12,485,827) (7,883,385) (1,860,164)
Present Value of Interim Period Debt-free Cash Flows @ 12.0% 5,238,880 (12,597,308) (8,024,788) (1,910,436)
<CAPTION>
------------------------------------
For FYE December 31, 2005 Total
------------------------------------
<S> <C> <C>
Discount Period 4.00
Present Value of Interim Period Debt-free Cash Flows @ 537,924 (16,179,956)
Present Value of Interim Period Debt-free Cash Flows @ 557,220 (16,444,906)
Present Value of Interim Period Debt-free Cash Flows @ 577,389 (16,716,264)
</TABLE>
- 14 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
DISCOUNTED CASH FLOW ANALYSIS (OPTIMISTIC CASE -
NEW COURSES, ROLL-UP STRATEGY)
Assumptions
<TABLE>
<CAPTION>
--------------------------------------------------------------
ACTUAL PROJECTED
For FYE December 31, 1998 1999 2000 2001
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT ASSUMPTIONS
Rounds Played 572,387 717,038 839,339 973,730
Average Revenue per Round 33.44 35.62 36.27 36.64
Increase in Rounds Played NA 25.3% 17.1% 16.0%
Increase in Revenue per Round NA 6.5% 1.8% 1.0%
Cost of Sales and Operating Expenses as
a % of Revenue 57.0% 51.6% 55.5% 50.9%
Cart Lease Expense as a % of Revenue 4.9% 4.9% 4.8% 4.8%
Cart Lease Expense Growth NA 33.5% 15.7% 15.7%
COI Margin 43.0% 48.4% 44.5% 49.1%
COI Growth NA 50.4% 9.4% 29.5%
Corporate Overhead as a % of Revenue 10.0% 11.6% 10.8% 11.6%
EBITDA NA 8,130,939 8,796,475 11,692,799
EBITDA Margin NA 31.8% 28.9% 32.8%
EBITDA Growth NA NA 8.2% 32.9%
BALANCE SHEET ASSUMPTIONS
Beginning Original Fixed Assets (excluding land) NA NA 64,400,735 83,615,407
Plus: CapEx NA 15,273,770 27,514,313 0
Less: Assets Sold NA 94,813 3,837,150 0
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,156,215
Plus: Adjustment NA NA 5,965,566 0
--------------------------------------------------------------
Ending Original Fixed Assets (excluding land) NA 64,400,735 83,615,407 72,459,192
Remaining Years of Life (Original Fixed Assets) 7.5 years
Capital Improvements as a % of New Course
Acquisition Costs 20.0%
-----------------------------------------------------------------------------------------------------------------
New CapEx 713,574
-----------------------------------------------------------------------------------------------------------------
Depreciation of 2001 CapEx 10.0 years 35,679
Depreciation of 2002 CapEx 10.0 years
Depreciation of 2003 CapEx 10.0 years
Depreciation of 2004 CapEx 10.0 years
Depreciation of 2005 CapEx 10.0 years
-----------------------------------------------------------------------------------------------------------------
New CapEx Depreciation 35,679
-----------------------------------------------------------------------------------------------------------------
Total Depreciation and Amortization 8,413,249 10,428,057 11,191,894
Maintenance CapEx as a % of Revenue NA NA NA 2.0%
<CAPTION>
--------------------------------------------------------------
PROJECTED
For FYE December 31, 2002 2003 2004 2005
--------------------------------------------------------------
<S> <C> <C> <C> <C>
INCOME STATEMENT ASSUMPTIONS
Rounds Played 1,131,924 1,358,680 1,614,339 1,867,590
Average Revenue per Round 37.79 38.94 40.17 41.16
Increase in Rounds Played 16.2% 20.0% 18.8% 15.7%
Increase in Revenue per Round 3.1% 3.1% 3.2% 2.5%
Cost of Sales and Operating Expenses as
a % of Revenue 50.0% 49.3% 48.7% 48.1%
Cart Lease Expense as a % of Revenue 4.8% 4.8% 4.8% 4.8%
Cart Lease Expense Growth 9.5% 17.4% 14.8% 12.9%
COI Margin 50.0% 50.7% 51.3% 51.9%
COI Growth 21.9% 25.4% 24.2% 19.9%
Corporate Overhead as a % of Revenue 10.2% 8.6% 7.4% 6.6%
EBITDA 15,167,158 20,052,549 25,965,715 31,966,306
EBITDA Margin 35.5% 37.9% 40.0% 41.6%
EBITDA Growth 29.7% 32.2% 29.5% 23.1%
BALANCE SHEET ASSUMPTIONS
Beginning Original Fixed Assets (excluding land) 72,459,192 61,302,977 50,146,762 38,990,548
Plus: CapEx 0 0 0 0
Less: Assets Sold 0 0 0 0
Less: Depreciation and Amortization 11,156,215 11,156,215 11,156,215 11,156,215
Plus: Adjustment 0 0 0 0
----------------------------------------------------------------
Ending Original Fixed Assets (excluding land) 61,302,977 50,146,762 38,990,548 27,834,333
Remaining Years of Life (Original Fixed Assets)
Capital Improvements as a % of New Course
Acquisition Costs 20.0% 20.0% 20.0% 20.0%
-----------------------------------------------------------------------------------------------------------------
New CapEx 5,255,417 5,458,234 5,696,969 5,937,454
-----------------------------------------------------------------------------------------------------------------
Depreciation of 2001 CapEx 71,357 71,357 71,357 71,357
Depreciation of 2002 CapEx 262,771 525,542 525,542 525,542
Depreciation of 2003 CapEx 272,912 545,823 545,823
Depreciation of 2004 CapEx 284,848 569,697
Depreciation of 2005 CapEx 296,873
-----------------------------------------------------------------------------------------------------------------
New CapEx Depreciation 334,128 869,811 1,427,571 2,009,292
-----------------------------------------------------------------------------------------------------------------
Total Depreciation and Amortization 11,490,343 12,026,026 12,583,786 13,165,507
Maintenance CapEx as a % of Revenue 2.0% 2.0% 2.0% 2.0%
</TABLE>
- 15 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
COMPARABLE COMPANY ANALYSIS
--------------------------------------------------------------------------------
[_] Comparable Public Company Approach
. Based on the theory that the value of any company can be
estimated based on the public market trading prices for other
companies engaged in a similar line of business.
. Pertinent financial and market price information of comparable
companies that are considered to be similar to the subject
company is used as a basis for estimating the value of the
subject company.
. The subject company is compared both quantitatively and
qualitatively to the comparable companies, and the indicated
valuation multiples are adjusted to reflect the results of that
comparison.
. Application of the appropriate market multiples, based on the
comparable companies, to the subject company's representative
levels of cash flow and other measures.
[_] Determination of Representative Levels
. Determination of representative levels of the Company's cash flow
generating capability going forward, and ensuring consistency
with historical financial performance and growth rates.
. We have analyzed course operating income ("COI") on both a
historical and projected basis. We have selected a representative
COI course by course based on when the golf course COI
stabilizes.
. After determining a normalized COI, we adjusted for normalized
overhead (4% of revenues), and cart lease expense to derive a
representative level of earnings before interest, taxes,
depreciation and amortization ("EBITDA").
[_] Selection of Market Multiples to Apply to Representative Levels
. Comparable public companies were used as a guide.
. Investment attributes of GGP were contrasted to the comparable
companies.
. Selected market multiples on a controlling interest basis.
- 16 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
COMPARABLE COMPANY ANALYSIS
--------------------------------------------------------------------------------
[_] Determination of Value
. Applying the range of reasonable Enterprise Value/EBITDA
multiples to representative GGP EBITDA results in a range of
total enterprise value indications.
. Adding cash and other assets to Enterprise Value and deducting
interest bearing debt results in indications of fair market value
of the Company's equity, on a controlling interest basis, of
$22.5 million to $37.8 million.
- 17 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
COMPARABLE PUBLIC COMPANY ANALYSIS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------
VALUATION RANGE
-------------------------------------------------
<S> <C> <C> <C>
Rep Level EBITDA 15,287,275 15,287,275 15,287,275
EBITDA Multiple 9.0x 9.5x 10.0x
-------------------------------------------------
Enterprise Value Indication 137,585,474 145,229,112 152,872,749
Less: Total Debt (119,825,333) (119,825,333) (119,825,333)
Less: Addition Hawklake CapE (800,000) (800,000) (800,000)
Plus: Other Assets 3,155,000 3,155,000 3,155,000
Plus: Cash & Equivalents 2,363,225 2,363,225 2,363,225
-------------------------------------------------
Equity Value (rounded) 22,478,366 30,122,004 37,765,641
</TABLE>
- 18 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
REPRESENTATIVE LEVELS
Representative Revenue and COI
<TABLE>
<CAPTION>
COI
---------------------------------------------------------------------------------
ACTUAL PROJECTED REP
1998 1999 2000 2001 2002 2003 LEVEL
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MIDDLE ATLANTIC REGION
1998 ACQUISITIONS
Edgewood in the Pines 818,974 657,142 710,340 715,434 729,743 744,338 718,506
Lake Arbor Golf Club 631,220 541,348 408,518 567,583 590,853 614,947 567,583
Robin Dale Golf Club 489,868 497,348 333,871 490,616 515,682 541,604 503,149
Maple Ridge Golf Club 598,118 396,163 465,104 486,747 507,281 528,550 497,014
Wild Oaks Golf Club 572,943 540,109 335,670 431,852 444,808 467,643 456,225
Honey Run Golf Club 547,873 628,525 598,065 774,141 803,148 819,211 774,141
Greencastle Greens Golf Club 439,891 484,146 470,278 480,215 508,798 538,691 478,213
The Links at Challedon 505,604 1,137,111 1,130,464 1,122,531 1,152,230 1,182,596 1,126,498
Fairfax National Golf Club 604,620 1,399,461 1,431,054 1,496,957 1,608,803 1,669,646 1,496,957
Fox Hollow Golf Club 472,124 947,310 727,793 778,934 794,513 810,403 778,934
Montgomery Country Club 642,886 1,597,882 1,694,796 1,834,737 1,909,974 1,987,873 1,834,737
---------------------------------------------------------------------------------
1999 ACQUISITIONS
Royal Oaks Golf Club NA 557,931 638,706 796,522 828,035 860,646 828,035
Mountain Laurel Golf Club NA 375,661 533,653 634,035 668,853 693,742 668,853
---------------------------------------------------------------------------------
2000 ACQUISITIONS
Four Seasons Golf Club NA NA 346,301 410,706 426,692 443,231 410,706
Glade Valley Golf Club NA NA 866,513 857,296 905,783 947,862 876,531
Bear Creek Golf Club NA NA 416,897 500,202 530,939 573,901 552,420
Hickory Heights Golf Club NA NA 285,967 705,928 750,130 780,775 765,453
West Winds Golf Club NA NA 269,782 611,900 644,249 678,129 661,189
Monroe Valley Golf Club NA NA 4,374 509,679 551,044 583,884 551,044
The Bridges NA NA (10,075) 833,711 899,598 944,900 899,598
---------------------------------------------------------------------------------
UNDERGOING REDESIGN
Hawk Lake Golf Club 463,725 412,083 66,403 147,873 705,500 789,540 747,520
---------------------------------------------------------------------------------
SOUTHEASTERN REGION
Miami National Golf Club 670,245 779,053 564,028 736,589 751,321 766,347 736,589
California Golf Club 572,892 641,300 419,283 436,132 464,545 493,964 450,338
Montgomery National Golf Club 192,008 182,577 100,492 191,854 201,126 205,149 191,854
Sapphire Mountain Golf Club NA 592,905 540,995 602,759 620,073 637,785 602,759
St. James Golf Club NA NA 185,030 377,719 408,815 441,475 425,145
---------------------------------------------------------------------------------
TOTAL GGP 8,222,991 12,368,057 13,534,300 17,532,652 18,922,526 19,746,831 18,599,990
=================================================================================
</TABLE>
- 19 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
REPRESENTATIVE LEVELS
Representative Revenue and COI
<TABLE>
<CAPTION>
COI GROWTH
-----------------------------------------------------------------
ACTUAL PROJECTED
1999 2000 2001 2002 2003
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MIDDLE ATLANTIC REGION
1998 ACQUISITIONS
Edgewood in the Pines -19.8% 8.1% 0.7% 2.0% 2.0%
Lake Arbor Golf Club -14.2% -24.5% 38.9% 4.1% 4.1%
Robin Dale Golf Club 1.5% -32.9% 46.9% 5.1% 5.0%
Maple Ridge Golf Club -33.8% 17.4% 4.7% 4.2% 4.2%
Wild Oaks Golf Club -5.7% -37.9% 28.7% 3.0% 5.1%
Honey Run Golf Club 14.7% -4.8% 29.4% 3.7% 2.0%
Greencastle Greens Golf Club 10.1% -2.9% 2.1% 6.0% 5.9%
The Links at Challedon 124.9% -0.6% -0.7% 2.6% 2.6%
Fairfax National Golf Club 131.5% 2.3% 4.6% 7.5% 3.8%
Fox Hollow Golf Club 100.6% -23.2% 7.0% 2.0% 2.0%
Montgomery Country Club 148.5% 6.1% 8.3% 4.1% 4.1%
------------------------------------------------------------------
1999 ACQUISITIONS
Royal Oaks Golf Club NA 14.5% 24.7% 4.0% 3.9%
Mountain Laurel Golf Club NA 42.1% 18.8% 5.5% 3.7%
------------------------------------------------------------------
2000 ACQUISITIONS
Four Seasons Golf Club NA NA 18.6% 3.9% 3.9%
Glade Valley Golf Club NA NA -1.1% 5.7% 4.6%
Bear Creek Golf Club NA NA 20.0% 6.1% 8.1%
Hickory Heights Golf Club NA NA 146.9% 6.3% 4.1%
West Winds Golf Club NA NA 126.8% 5.3% 5.3%
Monroe Valley Golf Club NA NA 11552.5% 8.1% 6.0%
The Bridges NA NA -8375.0% 7.9% 5.0%
------------------------------------------------------------------
UNDERGOING REDESIGN
Hawk Lake Golf Club -11.1% -83.9% 122.7% 377.1% 11.9%
------------------------------------------------------------------
SOUTHEASTERN REGION
Miami National Golf Club 16.2% -27.6% 30.6% 2.0% 2.0%
California Golf Club 11.9% -34.6% 4.0% 6.5% 6.3%
Montgomery National Golf Club -4.9% -45.0% 90.9% 4.8% 2.0%
Sapphire Mountain Golf Club NA -8.8% 11.4% 2.9% 2.9%
St. James Golf Club NA NA 104.1% 8.2% 8.0%
------------------------------------------------------------------
TOTAL GGP 50.4% 9.4% 29.5% 7.9% 4.4%
==================================================================
</TABLE>
- 20 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
REPRESENTAUVE LEVELS
Representative Revenue and COI
<TABLE>
<CAPTION>
COI MARGIN
-----------------------------------------------------------------------------
ACTUAL PROJECTED
1998 1999 2000 2001 2002 2003
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MIDDLE ATLANTIC REGION
1998 ACQUISITIONS
Edgewood in the Pines 43.5% 38.7% 41.4% 42.5% 42.5% 42.5%
Lake Arbor Golf Club 47.6% 44.5% 34.7% 47.6% 48.1% 48.6%
Robin Dale Golf Club 47.8% 47.6% 38.1% 48.7% 49.7% 50.6%
Maple Ridge Golf Club 31.4% 34.2% 43.2% 45.1% 45.6% 46.1%
Wild Oaks Golf Club 48.8% 49.6% 39.3% 46.9% 46.9% 47.4%
Honey Run Golf Club 49.3% 52.3% 46.4% 57.2% 57.7% 57.7%
Greencastle Greens Golf Club 47.4% 51.7% 48.1% 50.6% 51.6% 52.5%
The Links at Challedon 52.3% 60.0% 58.6% 60.8% 61.1% 61.5%
Fairfax National Golf Club 48.8% 54.3% 52.2% 54.8% 56.1% 56.5%
Fox Hollow Golf Club 64.0% 60.5% 52.3% 59.3% 59.3% 59.3%
Montgomery Country Club 43.6% 44.3% 43.8% 47.6% 48.1% 48.6%
-----------------------------------------------------------------------------
1999 ACQUISITIONS
Royal Oaks Golf Club NA 53.2% 44.1% 51.1% 51.6% 52.1%
Mountain Laurel Golf Club NA 64.3% 53.0% 57.3% 58.1% 58.5%
-----------------------------------------------------------------------------
2000 ACQUISITIONS
Four Seasons Golf Club NA NA 51.1% 52.8% 53.3% 53.8%
Glade Valley Golf Club NA NA 62.9% 60.4% 60.8% 61.1%
Bear Creek Golf Club NA NA 48.5% 48.3% 49.2% 50.7%
Hickory Heights Golf Club NA NA 45.0% 46.9% 48.0% 48.5%
West Winds Golf Club NA NA 43.0% 43.7% 44.3% 44.8%
Monroe Valley Golf Club NA NA 4.3% 49.1% 50.5% 51.5%
The Bridges NA NA -85.1% 47.8% 49.1% 49.6%
-----------------------------------------------------------------------------
UNDERGOING REDESIGN
Hawk Lake Golf Club 53.1% 49.9% 29.3% 65.7% 50.6% 52.4%
-----------------------------------------------------------------------------
SOUTHEASTERN REGION
Miami National Golf Club 31.3% 40.0% 31.3% 39.0% 39.0% 39.0%
California Golf Club 35.7% 44.8% 34.3% 36.3% 37.5% 38.7%
Montgomery National Golf Club 25.6% 27.7% 19.9% 35.3% 35.9% 35.9%
Sapphire Mountain Golf Club NA 56.2% 50.9% 53.4% 53.9% 54.3%
St. James Golf Club NA NA 18.9% 32.1% 33.4% 34.7%
-----------------------------------------------------------------------------
TOTAL GGP 43.0% 48.4% 44.5% 49.1% 49.7% 50.3%
=============================================================================
</TABLE>
- 21 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
REPRESENTATIVE LEVELS
Representative Revenue and COI
<TABLE>
<CAPTION>
REVENUE
------------------------------------------------------------------------------------
ACTUAL PROJECTED REP
1998 1999 2000 2001 2002 2003 LEVEL
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MIDDLE ATLANTIC REGION
1998 ACQUISITIONS
Edgewood in the Pines 1,884,263 1,697,668 1,717,838 1,681,837 1,715,474 1,749,783 1,705,050
Lake Arbor Golf Club 1,324,983 1,215,390 1,177,674 1,191,875 1,227,631 1,264,460 1,191,875
Robin Dale Golf Club 1,025,726 1,044,843 876,405 1,008,012 1,038,252 1,069,400 1,023,132
Maple Ridge Golf Club 1,905,044 1,158,233 1,077,774 1,079,899 1,112,296 1,145,665 1,096,097
Wild Oaks Golf Club 1,174,015 1,090,009 854,553 921,479 949,123 987,088 968,106
Honey Run Golf Club 1,110,596 1,201,164 1,289,819 1,352,461 1,393,035 1,420,896 1,352,461
Greencastle Greens Golf Club 927,750 937,316 978,259 948,425 986,362 1,025,816 954,667
The Links at Challedon 966,237 1,895,201 1,930,136 1,847,409 1,884,357 1,922,044 1,888,773
Fairfax National Golf Club 1,238,247 2,579,241 2,741,193 2,730,215 2,866,726 2,952,728 2,730,215
Fox Hollow Golf Club 737,685 1,564,920 1,390,672 1,313,652 1,339,925 1,366,724 1,313,652
Montgomery Country Club 1,474,153 3,604,135 3,866,081 3,854,275 3,969,903 4,089,000 3,854,275
------------------------------------------------------------------------------------
1999 ACQUISITIONS
Royal Oaks Golf Club NA 1,049,309 1,448,058 1,558,249 1,604,996 1,653,146 1,604,996
Mountain Laurel Golf Club NA 584,561 1,006,406 1,106,867 1,151,142 1,185,676 1,151,142
------------------------------------------------------------------------------------
2000 ACQUISITIONS
Four Seasons Golf Club NA NA 677,969 777,206 800,522 824,538 777,206
Glade Valley Golf Club NA NA 1,378,614 1,419,555 1,490,533 1,550,154 1,429,567
Bear Creek Golf Club NA NA 859,697 1,036,644 1,078,110 1,132,015 1,105,063
Hickory Heights Golf Club NA NA 635,108 1,504,155 1,564,321 1,611,251 1,587,786
West Winds Golf Club NA NA 627,813 1,399,229 1,455,198 1,513,406 1,484,302
Monroe Valley Golf Club NA NA 101,526 1,039,036 1,090,988 1,134,627 1,090,988
The Bridges NA NA 11,833 1,744,165 1,831,373 1,904,628 1,831,373
------------------------------------------------------------------------------------
UNDERGOING REDESIGN
Hawk Lake Golf Club 872,630 826,204 226,683 225,000 1,395,500 1,507,140 1,451,320
------------------------------------------------------------------------------------
SOUTHEASTERN REGION
Miami National Golf Club 2,143,807 1,945,654 1,801,935 1,887,281 1,925,027 1,963,527 1,887,281
California Golf Club 1,606,805 1,430,096 1,222,175 1,202,581 1,238,658 1,275,818 1,220,620
Montgomery National Golf Club 749,615 658,726 503,972 543,496 559,801 570,997 543,496
Sapphire Mountain Golf Club NA 1,054,818 1,063,751 1,128,617 1,151,189 1,174,213 1,128,617
St. James Golf Club NA NA 978,770 1,177,085 1,224,168 1,273,135 1,248,652
-----------------------------------------------------------------------------------
TOTAL GGP 19,141,556 25,537,488 30,444,714 35,678,706 38,044,612 39,267,877 37,620,711
====================================================================================
</TABLE>
- 22 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
REPRESENTATIVE LEVELS
Summary Schedule
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
HISTORICAL PROJECTED
1998 1999 2000 2001 2002
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Revenue 19,141,556 25,537,488 30,444,714 35,678,706 38,044,612
Less: Cost of Sales and Operating Expenses 10,918,565 13,169,431 16,910,414 18,146,053 19,122,085
------------------------------------------------------------------------------------
Course Operating Income (COI) 8,222,991 12,368,057 13,534,300 17,532,653 18,922,526
COI MARGIN 43.0% 48.4% 44.5% 49.1% 49.7%
Less: Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894 11,265,617
Less: Cart Lease Expense 946,404 1,263,612 1,461,992 1,703,612 1,737,684
Less: Corporate Overhead (1) 1,911,158 2,973,506 3,275,833 4,136,242 4,343,054
------------------------------------------------------------------------------------
EBIT NA (282,310) (1,631,582) 500,905 1,576,171
Plus: Depreciation and Amortization NA 8,413,249 10,428,057 11,191,894 11,265,617
------------------------------------------------------------------------------------
EBITDA NA 8,130,939 8,796,475 11,692,799 12,841,788
Plus: Corporate Overhead (1) 1,911,158 2,973,506 3,275,833 4,136,242 4,343,054
Less: Maintenance CapEx (2) (382,831) (510,750) (608,894) (713,574) (760,892)
-------------------------------------------------------------------------------------
NOI NA 10,593,695 11,463,414 15,115,467 16,423,950
<CAPTION>
------------------------------------
PROJECTED REP
2003 LEVEL
------------------------------------
<S> <C> <C>
Total Revenue 39,267,877 37,620,711
Less: Cost of Sales and Operating Expenses 19,521,046 19,020,721
------------------------------------
Course Operating Income (COI) 19,746,831 18,599,990
COI MARGIN 50.3% 49.4%
Less: Depreciation and Amortization 11,342,929 11,200,000
Less: Cart Lease Expense 1,772,438 1,807,887
Less: Corporate Overhead (1) 4,560,207 1,504,828
------------------------------------
EBIT 2,071,257 4,087,275
Plus: Depreciation and Amortization 11,342,929 11,200,000
------------------------------------
EBITDA 13,414,186 15,287,275
Plus: Corporate Overhead (1) 4,560,207 1,504,828
Less: Maintenance CapEx (2) (785,358) (752,414)
------------------------------------
NOI 17,189,036 16,039,689
</TABLE>
(1) Rep level based on normalized corporate overhead (4% of revenue according
to management and industry statistics).
(2) Estimated at 2% of revenue.
- 23 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
AUGUST 16, 2001
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK PRICE AS ENTERPRISE VALUE AS
A MULTIPLE OF A MULTIPLE OF
---------------------- ------------------------
BOOK
COMMON EQUITY ENTERPRISE DEBT/ LTM PRO- VALUE
STOCK VALUE VALUE ENTERPRISE REVENUES LTM JECTED PER LTM LTM LTM
COMPANY PRICE (IN MIL) (IN MIL) VALUE (IN MIL) EPS EPS SHARE EBITDA EBIT REVENUES
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN SKIING CO. $0.97 $30 $599 61.6% $435 NM NM 0.2x 11.2x 78.5x 1.4x
CLUBHAUS PLC* 0.32 32 128 76.3% 45 3.9 3.3 0.4 7.0 8.5 2.8
CLUBLINK CORP.* 6.20 125 355 65.4% 106 29.4 18.8 0.6 14.1 22.6 3.4
GOLF TRUST OF AMERICA 8.36 69 336 62.5% 53 NM NA 1.1 9.7 16.1 6.4
CROWN SPORTS PLC* 0.25 63 79 32.6% 4 NM NA 1.0 NM NM NM
NATIONAL GOLF PROPERTIES 20.20 264 895 50.9% 121 11.7 6.0 2.2 7.8 11.8 7.4
PGA EURO. TOUR COURSES PLC* 0.47 30 33 11.7% 8 17.9 NA 1.3 14.0 17.8 4.0
HIGHEST 20.20 264 895 76.3% 435 29.4 18.8 2.2 14.1 78.5 7.4
LOWEST 0.25 30 33 11.7% 4 3.9 3.3 0.2 7.0 8.5 1.4
MEAN 5.25 87 346 51.6% 110 15.7 9.4 1.0 10.6 25.9 4.2
MEDIAN 0.97 63 336 61.6% 53 14.8 6.0 1.0 10.4 16.9 3.7
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
GROWTH RATES MARGIN ANALYSIS RETURN ANALYSIS
--------------------------------------------------- ----------------------- --------------------------
3-YR.
3-YR. 3-YR. TERM 3-YR. LTM AVG. 3-YR. 3-YR.
LTM CAGR LTM CAGR PROJ. LTM AVG. NET NET LTM AVG. LTM AVG.
COMPANY REVENUES REVENUES EBITDA EBITDA EPS EBITDA EBITDA INCOME INCOME ROE ROE ROA ROA
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN SKIING CO. 11.2 34.2 17.8 12.9 NA 12.3 16.4 (8.2) (4.5) NM 1.0 NM 4.9
CLUBHAUS PLC 34.1 36.2 41.6 42.9 NA 40.3 39.3 19.3 24.2 10.0 9.5 6.7 6.2
CLUBLINK CORP. 0.1 44.2 (0.7) 28.6 NA 23.8 27.2 4.4 8.4 2.3 4.1 2.4 2.8
GOLF TRUST OF AMERICA (8.5) 43.6 (33.1) 42.9 NA 65.4 87.4 (0.2) 18.1 NM 7.4 NM 4.8
CROWN SPORTS PLC (0.7) 39.9 20.4 33.1 NA 16.7 18.8 10.7 11.8 0.4 0.4 1.1 3.2
NATIONAL GOLF PROPERTIES 5.4 16.7 5.5 17.7 9.5 95.4 94.8 18.8 17.5 18.5 14.0 6.0 8.4
PGA EURO. TOUR COURSES PLC 11.9 (0.7) 22.0 27.8 NA 28.4 27.1 19.9 16.3 7.2 5.6 6.2 5.1
HIGHEST 34.1 44.2 41.6 42.9 9.5 95.4 94.8 19.9 24.2 18.5 14.0 6.7 8.4
LOWEST (8.5) (0.7) (33.1) 12.9 9.5 12.3 16.4 (8.2) (4.5) 0.4 0.4 1.1 2.8
MEAN 7.6 30.6 10.5 29.4 9.5 40.3 44.4 9.2 13.1 7.7 6.0 4.5 5.0
MEDIAN 5.4 36.2 17.8 28.6 9.5 28.4 27.2 10.7 16.3 7.2 5.6 6.0 4.9
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
PRICE %
ONE CHANGE
YEAR IN LLM LTM PROJECTED PRICE AS A MULTIPLE
INDEX PRICE AGO PRICE EPS EPS LTM EPS PROJ. EPS
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dow Jones Industrial Average $10,412.2 $11,176.1 -6.8% $401.3 $505.0 25.9 20.6
S&P 500 1,186.7 1,491.6 -20.4 45.4 52.5 26.1 22.6
NASDAQ Composite 1,964.9 3,849.7 -49.0
============================================================================================================
</TABLE>
* NOTE: FIGURES FOR CLUBHAUS PLC, CROWN SPORTS PLC, AND PGA EURO. TOUR COURSES
PLC ARE DISPLAYED IN BRITISH POUNDS (BP); FIGURES FOR CLUBLINK CORP. ARE
DISPLAYED IN CANADIAN DOLLARS (CD).
Source: Standard & Poor's Compustat Services, Inc., Duff & Phelps, LLC and
First Call Corporation.
- 24 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
FINANCIAL PROFILE
(IN MILLIONS, EXCEPT PER SHARE DATA)
AUGUST 16, 2001
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
CROWN
AMERICAN CLUBHAUS CLUBLINK GOLF TRUST SPORTS NATIONAL PGA EURO. GOTHAM GOTHAM
SKIING CO. PLC CORP. OF AMERICA PLC GOLF PROP. TOUR COURSES GOLF GOLF
------------------------------------------------------------------------------------------------------------------------------------
BRITISH CANADIAN BRITISH BRITISH
POUNDS DOLLARS POUNDS POUNDS
<S> <C> <C> <C> <C> <C> <C> <C>
Common Stock Price $ 0.97 $ 0.32 $ 6.20 $ 8.36 $ 0.25 $20.20 $ 0.47
Common Stock Price-One
Yr. Ago 2.25 0.60 5.70 14.06 0.26 20.75 0.42
PERCENT PRICE CHANGE -56.9% -46.2% 8.8% -40.6% -1.0% -2.7% 11.9%
52-week High $ 2.81 $ 0l.61 $ 6.80 $14.25 $ 0.37 $27.70 $ 0.57
52-week Low 0.75 0.31 5.10 6.56 0.24 19.25 0.26
Indicated Dividend $ 0.00 $ 0.00 $ 0.00 $ 1.00 $ 0.00 $ 1.84 $ 0.00
DIVIDEND YIELD 0.0% 0.0% 0.0% 12.0% 0.05 9.1% 0.0%
Book Value Per Share $ 5.20 $ 0.89 $ 10.16 $ 7.59 $ 0.25 $ 9.15 $ 0.37
TRADING ACTIVITY
Common Shares Outstanding 30.51 101.04 20.16 8.22 250.22 13.05 63.46
Stock Exchange NYSE London Toronto ASE London NYSE London
CAPITALIZATION
Market Value of Common
Equity $ 29.6 $ 32.3 $ 125.0 $ 68.7 $ 63.2 $263.7 $ 29.8
Plus: Total Debt
Outstanding 369.3 97.6 232.0 210.0 25.7 455.8 3.9
Plus: Book Value of
Preferred Stock 218.3 0.0 0.0 20.0 0.0 0.0 0.0
Plus: Minority Interest 0.0 0.0 0.0 41.9 0.0 175.5 0.0
Less: Cash and Equivalents 17.9 2.0 2.2 4.8 10.2 0.4 0.5
ENTERPRISE VALUE 599.3 128.0 354.7 335.9 78.7 894.6 33.2
DEBT TO ENTERPRISE VALUE 61.6% 76.3% 65.4% 62.5% 32.6% 50.9% 11.7%
====================================================================================================================================
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc., Bloomberg L.P., and Duff &
Phelps, LLC.
- 25 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
FINANCIAL PERFORMANCE
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CROWN PGA EURO.
AMERICAN CLUBHAUS CLUBLINK GOLF TRUST SPORTS NATIONAL TOUR GOTHAM GOTHAM
SKIING CO. PLC CORP. OF AMERICA PLC GOLF PROP. COURSES GOLF GOLF
------------------------------------------------------------------------------------------------------------------------------------
AUDITED
BRITISH CANADIAN BRITISH BRITISH FINAN- REP
POUNDS DOLLARS POUNDS POUNDS CIALS LEVELS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LTM FINANCIAL RESULTS
Date of LTM Financial Rep
Results Apr01 Dec00 Apr01 Mar01 Dec00 Jun01 Dec00 Dec00 Levels
Revenues $435.0 $45.2 $105.8 $52.7 $3.5 $120.8 $8.4 $30.8 $37.6
EBITDA 53.7 18.2 25.2 34.5 0.6 115.3 2.4 8.7 15.3
EBIT 7.6 15.1 15.7 20.8 0.4 75.8 1.9 (1.8) 4.1
Net Income (35.7) 8.7 4.7 (0.1) 0.4 22.8 1.7 (9.4) NA
Diluted EPS (2.07) 0.08 0.21 (0.18) 0.00 1.7 0.03 NA
FISCAL YEAR END RESULTS
Date of Latest Fiscal
Year End Jul00 Dec00 Dec00 Dec00 Dec00 Dec00 Dec00 Dec99
Revenues $424.1 $45.2 $105.7 $55.5 $3.5 $118.0 $8.4 $25.7
EBITDA 47.0 18.2 25.4 47.3 0.6 112.3 2.4 7.1
EBIT (0.0) 15.1 16.2 29.0 0.4 72.2 1.9 (1.3)
Net Income (30.1) 8.7 6.9 5.1 0.4 19.2 1.7 (7.2)
Diluted EPS (1.69) 0.08 0.33 0.40 0.00 1.47 0.03 NA
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CROWN PGA EURO.
AMERICAN CLUBHAUS CLUBLINK GOLF TRUST SPORTS NATIONAL TOUR GOTHAM GOTHAM
SKIING CO. PLC CORP. OF AMERICA PLC GOLF PROP. COURSES GOLF GOLF
------------------------------------------------------------------------------------------------------------------------------------
BRITISH CANADIAN BRITISH BRITISH
POUNDS DOLLARS POUNDS POUNDS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PROJECTED FINANCIAL RESULTS
Date of Projected
Financial Results 7/31/01 7/31/01 7/31/01 NA NA 12/31/01 NA 12/31/01 12/31/01
EBITDA $21.6 $25.8 $24.5 NA NA $141.4 NA $11.7 $11.7
EBIT (24.4) 22.6 14.9 NA NA 102.0 NA 500.9 500.9
Net Income (45.2) 9.9 6.7 NA NA 43.9 NA NA NA
Diluted EPS (1.48) 0.10 0.33 NA NA 3.3 NA NA NA
FIRST CALL EARNINGS ESTIMATES
Date of First Call
Estimates 6/21/01 7/31/01 7/31/01 NA NA 5/24/01 NA
Date of Next Fiscal Year
End 7/31/01 12/31/01 12/31/01 NA NA 12/31/01 NA
EPS Projection -1.86 0.10 0.33 NA NA 3.36 NA
Range of EPS
Projections -2.12/-1.60 .090/.105 .26/.47 NA NA 3.35/3.36 NA
Number of Analysts 2 2 3 NA NA 4 NA
Date of 2nd Fiscal
Year End 7/31/02 12/31/02 12/31/02 NA NA 12/31/02 NA
EPS Projection -1.48 0.10 0.32 NA NA 3.66 NA
Range of EPS
Projections -1.48/-1.48 .0984/.1010 .32/.32 NA NA 3.62/3.69 NA
Number of Analysts 1 2 1 NA NA 4 NA
Long-term Earnings
Growth Rate NA NA NA NA NA 9.5% NA
====================================================================================================================================
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc. Duff & Phelps, LLC and First
Call Corporation.
- 26 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
HISTORICAL PROFIT MARGINS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CROWN PGA EURO.
AMERICAN CLUBHAUS CLUBLINK GOLF TRUST SPORTS NATIONAL TOUR GOTHAM GOTHAM
SKIING CO. PLC CORP. OF AMERICA PLC GOLF PROP. COURSES GOLF GOLF
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS MARGINS (%)
LTM 25.0 63.2 87.2 65.4 82.9 95.4 89.8 92.3 92.3
2000 22.7 63.2 87.2 85.3 82.9 95.2 89.8 92.3 92.3
1999 29.0 60.5 87.2 89.1 82.2 95.4 89.0 93.2 93.2
1998 37.1 60.9 80.9 87.8 82.2 93.8 89.2 86.0 86.0
Three-Year Average 29.6 61.6 85.1 87.4 82.4 94.8 89.4 90.5 90.5
EBITDA MARGINS (%)
LTM 12.3 40.3 23.8 65.4 16.7 95.4 28.4 28.1 28.1
2000 11.1 40.3 24.0 85.3 16.7 95.2 28.4 28.1 28.1
1999 13.4 38.2 23.5 89.1 13.8 95.4 26.1 27.6 27.6
1998 24.6 39.4 34.1 87.8 26.0 93.8 26.9 38.0 38.0
Three-Year Average 16.4 39.3 27.2 87.4 18.8 94.8 27.1 31.3 31.3
EBIT MARGINS (%)
LTM 1.8 33.4 14.8 39.5 10.7 62.8 22.3 (5.7) (5.7)
2000 (0.0) 33.4 15.3 52.3 10.7 61.2 22.3 (5.7) (5.7)
1999 (0.5) 32.2 15.3 58.1 7.9 61.3 20.3 (5.1) (5.1)
1998 13.4 30.5 28.2 61.5 21.1 61.3 20.0 NA NA
Three-Year Average 4.3 32.0 19.6 57.3 13.2 61.3 20.9 (5.4) (5.4)
NET INCOME MARGINS (%)
LTM (8.2) 19.3 4.4 (0.2) 10.7 18.8 19.9 (30.4) (30.4)
2000 (7.1) 19.3 6.5 9.1 10.7 16.3 19.9 (30.4) (30.4)
1999 (8.4) 22.0 5.9 20.7 5.0 16.2 17.7 (27.9) (27.9)
1998 2.0 31.2 12.7 24.4 19.8 20.0 11.4 NA NA
Three-Year Average (4.5) 24.2 8.4 18.1 11.8 17.5 16.3 (29.1) (29.1)
====================================================================================================================================
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc., Bloomberg L.P., and Duff &
Phelps, LLC.
- 27 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
HISTORICAL GROWTH RATES
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CROWN PGA EURO.
AMERICAN CLUBHAUS CLUBLINK GOLF TRUST SPORTS NATIONAL TOUR GOTHAM GOTHAM
SKIING CO. PLC CORP. OF AMERICA PLC GOLF PROP. COURSES GOLF GOLF
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES GROWTH (%)
LTM 11.2 34.1 0.1 (8.5) (0.7) 5.4 11.9 19.8 19.8
2000 33.8 34.1 14.5 (0.6) (0.7) 10.6 11.9 19.8 19.8
1999 (6.9) 40.0 26.9 25.7 47.1 28.0 9.4 34.4 34.4
1998 94.1 34.5 106.3 137.0 87.6 12.2 (20.0) NA NA
Three-Year CAGR 34.2 36.2 44.2 43.6 39.9 16.7 (0.7) NA NA
EBITDA GROWTH (%)
LTM 17.8 41.6 (0.7) (33.1) 20.4 5.5 22.0 21.8 21.8
2000 10.4 41.6 16.9 (4.8) 20.4 10.4 22.0 21.8 21.8
1999 (49.1) 35.6 (12.6) 27.5 (22.2) 30.1 6.1 (2.2) (2.2)
1998 156.2 51.8 108.4 140.6 152.0 13.4 61.4 NA NA
Three-Year CAGR 12.9 42.9 28.6 42.9 33.1 17.7 27.8 NA NA
NET INCOME GROWTH (%)
LTM NM 17.7 (32.3) NM 111.0 38.7 25.9 NA NA
2000 NM 17.7 26.7 (56.2) 111.0 11.2 25.9 NA NA
1999 NM (1.1) (41.1) 6.5 (62.8) 3.8 70.0 NA NA
1998 NM 87.1 97.2 81.4 60.0 17.0 27.9 NA NA
Three-Year CAGR NM 29.6 13.7 (5.4) 7.9 10.5 39.9 NA NA
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
CROWN PGA EURO.
AMERICAN CLUBHAUS CLUBLINK GOLF TRUST SPORTS NATIONAL TOUR GOTHAM GOTHAM
SKIING CO. PLC CORP. OF AMERICA PLC GOLF PROP. COURSES GOLF GOLF
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RETURNS ON AVERAGE
ASSETS (%)
LTM NM 6.7 2.4 NM 1.1 6.0 6.2 NM NM
2000 NM 6.7 2.8 -0.2 1.1 8.4 6.2 NM NM
1999 NM 5.9 2.1 6.6 2.7 8.5 5.8 NM NM
1998 4.9 6.1 3.6 8.0 5.7 8.2 3.2 NM NM
Three-Year Average 4.9 6.2 2.8 4.8 3.2 8.4 5.1 NA NA
RETURNS ON AVERAGE
COMMON EQUITY (%)
LTM NM 10.0 2.3 NM 0.4 18.5 7.2 NM NM
2000 NM 10.0 3.3 3.7 0.4 15.8 7.2 NM NM
1999 NM 8.8 2.9 9.2 NM 13.6 6.0 NM NM
1998 1.0 9.8 6.2 9.3 NM 12.5 3.7 NM NM
Three-Year Average 1.0 9.5 4.1 7.4 0.4 14.0 5.6 NA NA
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc., Bloomberg L.P., and Duff &
Phelps, LLC.
- 28 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
WORKING CAPITAL RATIOS
<TABLE>
<CAPTION>
GOLF
AMERICAN CLUBHAUS CLUBLINK TRUST CROWN NATIONAL PGA EURO.
SKIING CO. PLC CORP. OF SPORTS GOLF TOUR GOTHAM GOTHAM
AMERICA PLC PROP. COURSES GOLF GOLF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CURRENT RATIO 0.2 1.0 1.2 NA 1.0 NA 0.8 0.3 0.3
INVENTORY TURNOVER
LTM 33.5 5.0 3.9 NA 2.6 NA 1.9 3.5 3.5
Three-Year Average 23.5 3.7 4.2 NA 3.6 NA 1.5 NA NA
RECEIVABLE DAYS
LTM 10.0 15.9 7.8 541.1 6.7 60.5 19.8 35.7 35.7
Three-Year Average 6.8 13.3 29.8 507.8 10.9 72.1 15.6 NA NA
PAYABLE DAYS
LTM 101.8 57.2 211.1 154.6 452.8 927.1 297.7 176.0 176.0
Three-Year Average 80.6 66.7 267.1 603.9 264.8 757.3 301.3 NA NA
WORKING CAPITAL AS A
% OF REVENUES
LTM -30.1 -9.5 12.3 NA 16.5 NA -8.6 NM NM
Three-Year Average -21.9 -25.2 8.1 NA -45.1 NA -14.9 NA NA
</TABLE>
- 29 - DUFF & PHELPS, LLC
<PAGE>
FIRST UNION REAL ESTATE EQUITY
COMPARABLE COMPANY ANALYSIS
DEBT ANALYSIS
<TABLE>
<CAPTION>
GOLF
AMERICAN CLUBHAUS CLUBLINK TRUST CROWN NATIONAL PGA EURO.
SKIING CO. PLC CORP. OF SPORTS GOLF TOUR GOTHAM GOTHAM
AMERICA PLC PROP. COURSES GOLF GOLF
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TOTAL DEBT TO TOTAL
CAPITAL (%)
LTM 49.6 52.1 53.1 75.4 28.9 84.1 14.1 79.3 79.3
2000 53.0 52.1 52.5 76.7 28.9 83.9 14.1 79.3 79.3
1999 64.7 47.0 51.8 69.2 48.7 84.1 13.7 94.1 94.1
1998 57.0 28.5 48.9 72.4 51.0 77.3 7.3 NA NA
Three-Year Average 58.2 42.5 51.1 72.8 42.9 81.8 11.7 86.7 86.7
FIXED CHARGE COVERAGE
LTM 0.1 2.2 1.4 1.0 0.4 2.0 6.3 (0.2) (0.2)
2000 0.0 2.2 1.4 1.3 0.4 1.8 6.3 (0.2) (0.2)
1999 0.0 3.0 2.4 1.8 0.2 1.9 7.0 (0.2) (0.2)
1998 1.0 4.4 8.6 2.8 0.4 2.5 7.6 NA NA
Three-Year Average 0.3 3.2 4.1 2.0 0.3 2.1 7.0 NA NA
INTEREST COVERAGE
LTM 0.1 2.4 1.4 1.1 0.6 2.0 6.3 (0.2) (0.2)
2000 0.0 2.4 1.4 1.5 0.6 1.8 6.3 (0.2) (0.2)
1999 0.0 3.7 2.4 2.1 0.4 1.9 7.0 (0.2) (0.2)
1998 1.3 7.4 8.6 2.8 1.0 2.5 7.6 NA NA
Three-Year Average 0.4 4.5 4.1 2.1 0.7 2.1 7.0 NA NA
</TABLE>
Source: Standard & Poor's Compustat Services, Inc., Bloomberg L.P., and Duff &
Phelps, LLC.
- 30 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
NET ASSET VALUE ANALYSIS
--------------------------------------------------------------------------------
[_] Net Asset Value Approach
. Under the net asset value method, the assets and liabilities of
GGP are adjusted to market value as of a current date.
. To estimate the fair market value of GGP's golf course
operations, a capitalization of net operating income ("NOI")
approach was utilized.
. To determine appropriate capitalization multiples to use, Duff &
Phelps analyzed comparable golf course transactions and the
implied NOI capitalization rates.
. Applying a range of reasonable capitalization rates to a
representative level of GGP's NOI resulted in a range of value
indications for the golf course operations.
. Deducting the market value of liabilities from the market value
of assets results in indications of fair market value of the
Company's equity on a controlling interest basis, of $24.4
million to $37.7 million.
- 31 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
NET ASSET VALUE ANALYSIS
<TABLE>
<CAPTION>
---------------------------------------------------------
VALUATION RANGE
---------------------------------------------------------
<S> <C> <C> <C>
Rep Level NOI 16,039,689 16,039,689 16,039,689
Cap Rate 11.5% 11.0% 10.5%
--------------------------------------------------------
Enterprise Value Indication 139,475,558 145,815,356 152,758,944
Less: Total Debt (119,825,333) (119,825,333) (119,825,333)
Less: Addition Hawklake CapEx (800,000) (800,000) (800,000)
Plus: Other Assets 3,155,000 3,155,000 3,155,000
Plus: Cash & Equivalents 2,363,225 2,363,225 2,363,225
--------------------------------------------------------
Equity Value (rounded) 24,368,450 30,708,248 37,651,836
</TABLE>
- 32 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
OTHER ASSETS
VALUE
ASSETS TO BE EXCLUDED
Blackjack Bay Golf Club (1) 1,439,873
California Golf Excess Land (2), (3) 360,000
Miami National Excess Land (3) 600,000
St. James Residential Development Proceeds (4) 594,788
Fairfax National Lot Sales (5) 1,400,000
Sale Value of Old Owned Equipment 600,000
---------
Total 4,994,661
=========
ASSETS TO BE PURCHASED
Glade Valley Excess Land for 9 Hole Expansion (5) 250,000
Fairfax National Excess Land for 9 Hole Expansion(5) 250,000
Value of Hershey HQ Building (6) 1,205,000
Value of Helicopter (7) 1,450,000
---------
Total 3,155,000
=========
(1) Club was closed in September 2000 and is valued at the amount of debt
against the property, which is included in total debt.
(2) This parcel of excess land has an estimated net value of $360,000 ($560,000
gross less $200,000 cost to move the maintenance building)
(3) 50% owned by GGP
(4) Agreement entitles GGP to development payments of $1,500 per lot x 750 lots
= $1,125,000 in fees as lots are sold less $300,000 cost of the new
clubhouse. Estimated development period is approximately 5 years. D&P
assumed that the Company will receive approximately $165,000 annually over
the next 5 years and determined the PV of the fees by using the WACC of
12%.
(5) GGP Estimate
(6) Appraised Value as of 5/7/01
(7) Estimated value from Capital Helicopters
Note: Excludes notes receivable of $2.0 million, which will be eliminated prior
to the transaction per Gotham Partners
- 33 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
VALUATION SUMMARY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUATION APPROACH EQUITY VALUATION RANGE
<S> <C> <C> <C>
DISCOUNTED CASH FLOW ANALYSIS:
Pessimistic Case - NO NEW COURSES, EXISTING OVERHEAD 26,600,000 - 31,500,000
Base Case - NO NEW COURSES, NORMALIZED OVERHEAD 32,900,000 - 38,000,000
Optimistic Case - NEW COURSES - ROLL-UP STRATEGY 55,400,000 - 70,300,000
COMPARABLE PUBLIC COMPANY ANALYSIS 22,500,000 - 37,800,000
NET ASSET VALUE ANALYSIS 24,400,000 - 37,700,000
---------------------------------------------------------------------------------------------------
CONCLUDED VALUATION RANGE 26,500,000 - 36,500,000
---------------------------------------------------------------------------------------------------
</TABLE>
- 34 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
CALCULATION OF DISCOUNT RATE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
$ in millions
--------------------------------------------------------------------------------
Comparable Company Levered Market Value Book Value Debt/ Estimated Unlevered
Beta of Equity of Debt Capital Tax Rate Beta
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Ski Co. 0.64 $ 31.4 $369.3 92.2% 40.0% 0.08
Clubhaus Plc 0.46 $ 32.3 $ 97.6 75.1% 0.0% 0.11
Clublink Corp. 0.55 $123.0 $232.0 65.4% 40.0% 0.26
Crown Sports Plc 0.19 $ 63.2 $ 25.7 28.9% 0.0% 0.14
Golf Trust of America 0.53 $ 63.7 $210.0 76.7% 40.0% 0.18
National Golf Properties 0.50 $313.4 $452.7 59.1% 40.0% 0.27
PGA Euro. Tour Courses Plc 0.31 $ 29.8 $ 3.9 11.5% 40.0% 0.29
------------------------------------------------------------------------------------------------------------------
Low 0.19 $ 30 $ 4 11.5% 0.0% 0.08
High 0.64 $ 313 $ 453 92.2% 40.0% 0.29
Median 0.50 $ 63 $ 210 65.4% 40.0% 0.18
Mean 0.45 $ 94 $ 199 58.4% 28.6% 0.19
------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Est. Unlevered Tax % % Est. Levered
Beta Rate Debt Equity Beta (1)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
0.19 40.0% 75.0% 25.0% 0.53
Cost of Common Equity:
Risk-Free Rate 5.5% 30 Yr Treasury Bond Yield
Equity Risk Premium 8.2% SBBI 2001 Yearbook, Ibbotsen
Beta 0.53 Comparable Co. Beta Analysis
Small Stock Premium 2.6% SBBI 2001 Yearbook, Ibbotsen
Company Specific Premium 17.5% Plug to get Cost of Equity to 30%, typical return required by private equity firms
Cost of Equity 30.0% CAPM using inputs above
% Common Equity 25.0%
Cost of Debt:
Borrowing Rate 9.8% Marginal cost of debt, based on the last loan (BofA Other Facility 05/00 & 7/00)
After-Tax Cost of Debt 5.9% Based on 40% tax rate
% Debt 75.0% Based on industry mean and median - altered due to control basis
Weighted Average Cost of Capital 11.9%
---------------------------------------------
Concluded WACC (rounded) 12.0%
---------------------------------------------
</TABLE>
(1) Levered Beta - Unlevered Beta x (1 +((1-Tax Rate)x(Market Value of Debt /
Market Value of Equity)))
DEBT SCHEDULE (EXCLUDING WORKING CAPITAL LOAN FROM GOTHAM PARTNERS, THE BRIDGES
PURCHASE COMMITMENT AND BUYOUT OF OUTSIDE PARTNERS ALLOCATION)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
OUTSTANDING INTEREST WEIGHTED
DEBT COMPONENT AS OF 4/1/01 % OF TOTAL RATE RATE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BofA Facility A $ 36,804,361 35.3% 8.31% 2.93%
BofA Facility B $ 27,362,925 26.2% 8.79% 2.31%
BofA Other Facilities $ 11,764,598 11.3% 9.83% 1.11%
First Union Facility $ 5,379,865 5.2% 8.75% 0.45%
Orix USA Facility $ 12,448,049 11.9% 8.44% 1.01%
FMAC Facility $ 1,535,452 1.5% 10.87% 0.16%
Textron Facility $ 4,093,442 3.9% 8.56% 0.34%
Notes Payable - Wachovia Bank $ 2,200,000 2.1% 7.82% 0.17%
Hershey HQ Mortgage - Wachovia Bank $ 868,000 0.8% 7.62% 0.06%
GMAC & Waldorf Ford Notes - Vehicles $ 592,764 0.6% 10.00% 0.06%
Helicopter Note - Wachovia Bank $ 1,215,877 1.2% 9.25% 0.11%
--------------------------------------------------------------------------- --------------
SUBTOTAL INTEREST-BEARING DEBT $104,265,333 100.0% 8.70%
--------------------------------------------------------------------------- --------------
Working Capital Loan from Gotham Partners 8,600,000
The Bridges Purchase Contract 5,610,000
Buyout of Outside Partners 1,350,000
--------------------------------------------------------------
TOTAL INTEREST-BEARING DEBT 119,825,333
--------------------------------------------------------------
EXCLUDED DEBT
Donohoe, Inc. Facility - Blackjack Bay Golf $1,439,873 8.00%
</TABLE>
- 35 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
SUMMARY OF PRIMARY DIFFERENCES BETWEEN D&P AND GP DCF ANALYSIS
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
ITEM D&P GP
--------------------------------------------------------------------------------
<S> <C> <C>
Discount Rate WACC of 11.5% to 12.5% for No WACC of 10.45%
New Course Scenarios, WACC of 12%
to 14% for New Course Scenario.
NOI vs. COI Cap
Rate Capitalized NOI (COI - Cart Lease COI capitalization
Expense - Maintenance CapEx) at 11%. rate of 10.5%.
NOI capitalization, rather than
COI capitalization, is the industry
standard.
Acquisition Cost $4.4 million per course. $3.9 million per
course.
NPV Calculation Discounted using a mid-year Terminal Value
convention. Terminal Value is is included in the
discounted at the end of the last projected
projection period. period cash flow,
which results in
overvaluation.
Net Cash Flow
Calculation Debt-free approach, provision for Debt-free approach,
income taxes. no provision for
income taxes.
</TABLE>
- 36 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
CAPITALIZATION RATE ANALYSIS
INDICATED
SOURCE CAP. RATE RANGE
--------------------------------------------------------------------------------
1) GOLF TRUST OF AMERICA - DISPOSITION OF ASSETS SOLD ANALYSIS 10.51%
. First Union analyst report indicates an implied
cap rate median of 10.51% on courses sold (20 to
date) by GTA. Implied cap rate was based on GTA's
projected 2001 NOI, as estimated by First Union.
. First Union analyst projects the remaining assets
to sell for a median cap rate of 11.75%. 11.75%
2) NATIONAL GOLF PROPERTIES - NET ASSET VALUATION ANALYSIS 10.0% - 11.0%
. Merrill Lynch analyst estimated the net asset
value for National Golf's properties using cap
rates ranging from 10.0% to 11.0%. Analyst stated
that National Golf would generally look to
acquire assets generating an initial yield in the
10.0% to 11.0% range.
3) GOLF FINANCING & INVESTMENT SURVEY 10.85%
. Investor survey results for both daily fee and
private golf courses for Spring 2001.
. Survey indicated that the overall cap rate
increased to 10.85% in Spring 2001, which was an
increase of over 125 basis points from the
survey's 1998 low indication of 9.6%.
. Indicated cap rates for survey ranged from 5.0%
to 26.0%.
. Average overall cap rate for the Fall 2000 was
10.65%.
4) GOLF TRUST OF AMERICA - VALUATION ANALYSIS FOR FAIRNESS OPINION 11.1%
. Banc of America Securities (BAS) rendered a
fairness opinion in connection with the
liquidation of Golf Trust of America on February
25, 2001.
. BAS' comparable single property sales analysis
indicated a mean cap rate of 11.1% based on
historical and projected income and cash flow
figures.
5) OFFERS AND PURCHASES ON GOTHAM GOLF PARTNER GOLF COURSES 5.7% - 14.3%
. On March 16, 2001, GGP entered into agreements
with Dartmouth General Insurance Company to sale
the California Golf Club, Miami National Golf
Club, and St. James Golf Club (sale was
subsequently terminated). Duff & Phelps' analysis
indicated an implied cap rate range of 5.7% to
10.4% for the properties.
. On August 23, 2000, GGP entered into agreement to
purchase The Bridges Golf Club for $5.5 million
(GGP agreed to lease property with the option to
buy). Duff & Phelps' analysis indicated an
implied cap rate of 14.3% for the property.
6) GOLF COURSE SALES/ CAPITALIZATION RATE REPORT 10.5%
. Golf course sales report, which was published by
Crittenden Magazines, Inc., is a compilation of
specific golf course purchase prices and
capitalization rates, as well as other
information, for years 1999 through 2001.
. Indicated median capitalization rate for golf
course purchases during 2000 and 2001 with
available capitalization rate data, was 10.5%.
DUFF & PHELPS' CONCLUDED CAP RATE RANGE 10.5% TO 11.5%
----------------------------------------------------------------------
1) Source: First Union Securities, Inc., Analyst Report, August 9, 2001.
2) Source: Merrill Lynch, Analyst Report, April 20, 2001.
3) Source: GVI Consulting / PriceWaterhouseCoopers, Golf Financing &
Investment Survey, Spring 2001.
4) Source: Golf Trust of America Schedule 14A, Definitive Proxy Statement,
April 10, 2001.
5) Source: Sale and Purchase Agreements dated March 16, 2001 and
August 23, 2001.
6) Source: Crittenden Magazines, Inc., 2001
- 37 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS, L.P.
GOLF COURSE SALES REPORT
CRITTENDEN MAGAZINES, INC.
CAP RATE ANALYSIS
<TABLE>
<CAPTION>
ACQUISITION DATE/ # OF GREEN SALE CAP
COURSE NAME HOLES FEES ROUNDS CITY, STATE SELLER BUYER PRICE RATE
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 - 2001
-----------
Feb-01 Macquarie Links
Int'l Golf 18 NA NA NA Monarch Investments ClubCorp NA
Dec-00 Canyon Springs G.C. 18 NA 40,000 San Antonio, TX NA ClubCorp NA
Nov-00 Cascata G.C. 36 NA 40,000- Boulder City, NV Park Place MGM Mirage 60.0
50,000 Entertainment
Nov-00 Hamilton Mill G.C. 18 $75 35,000 Dacula, GA SMG Development Ass. Heritage Golf Group 9.0
Nov-00 Royal Meadows G.C. 27 $34 38,000 Kansas City, MO National Golf Properties Proformance Golf 3.0
Nov-00 San Ignacio G.C. 18 $60 44,000 Green Valley, AZ Fairfield Homes IRI Golf Group 5.5
Nov-00 The King & The
Bear G.C. 18 $175 30,000 St. Augustine, FL Scratch Golf Co. Honours Golf 28.8
Nov-00 The Slammer & The Squire 18 $160 NA St. Augustine, FL Scratch Golf Co. Honours Golf 28.8
Nov-00 The Tradition at Windsor 18 $40 32,000 Windsor, CT New Millbrook Golf Coastal Club 3.8 11.0%
Oct-00 Talega G.C. 18 $125 40,000 San Clemente, CA Talega Associates Heritage Golf Group 21.0 10.0%
Sep-00 Cimarron Hills G.C. 18 NA NA Georgetown, TX Phil Coffin Paloma Development
Group 9.2
Aug-00 Hell's Point G.C. 18 $58 40,000 Virginia Beach, VA Virginia Beach Golf Club Carl M. Freeman Golf 8.2 9-10x
EBITDA
Aug-00 North Carolina
National G.C. 18 $29 28,000 Statesville, NC Lennie Yountz North Carolina
National R.E. 2.7
Aug-00 Pebble Creek C.C. 36 $40 NA Taylors, SC ClubCorp LinksCorp 5.1 10.0%
Aug-00 Piedmont G.C. 18 $11 32,000 Haymarket, VA ClubLink ClubCorp 11.0
Aug-00 Willowbend G.C. 18 NA 43,000 Wichita, KS ClubCorp LinksCorp 1.9
Jul-00 The Bay Club 36 $59 52,000 Berlin, MD Bob Haley Carl M. Freeman Golf 8.9 8.5%+
Jun-00 Greatwood G.C. 18 $70 46,000 Sugarland, TX Terrabrook ClubCorp 15.0 8.0%
-10.0%
Jun-00 Lansbrook G.C. 18 $59 60,000 Palm Harbor, FL Lansbrook Development Crown Golf
Properties 5.0
Jun-00 North Ukes G.C. NA NA NA Brisbane, Australia Lend Lease Dev. ClubCorp NA
Jun-00 Plantation Oaks G.C. 18 $40 35,000 Alachua, FL Jay Johnson Dick May/Dennis
Thompson 3.0
Jun-00 Sabal Point C.C. 18 $35 33,000 Longwood, FL ClubCorp Meadowbrook Golf Group 3.5
Jun-00 The G.C. at Cinco Ranch 18 $61 40,000 Katy, TA Terrabrook ClubCorp 15.0 8.0%
-10.0%
Jun-00 The Tradition at
Wallingford 18 $49 35,000 Wallingford, CT Redstone Development Coastal Club 5.3 11.5%
May-00 Northgreen C.C. 18 $36 37,000 Rocky Mount, NC KSL McCumber Golf 1.5 10.0%
May-00 Rickenbacker G.C. 18 $36 36,000 Groveport, OH LinksCorp. Whiteford Valley II 2.0 11.0%
May-00 Tuscawilpa C.C. 18 $59 48,000 Winter Springs, FL GATX Capital RDC Golf Group 5.5 10.0%
Mar-00 Regents' Glen G.C. 18 $50 NA York, PA Wilmac Corp. Victor Posner
Enterprises 20.0
Mar-00 Southerness G.C. 18 $58 30,000 Stockbridge, GA International Golf HPG, Inc. 3.5
Feb-00 Canoa Hills G.C. 18 $65 55,000 Green Valley, AZ NA National Golf Properties 3.5 12.0%
- 13.0%
Feb-00 Polo Golf and C.C. 15 $50 40,000 Cumming, GA Fairgreen Capital Heritage Golf Group 8.8
Feb-00 Skybrook G.C. 18 $55 35,000 Huntersville, NC Stuart Frantz Legacy Golf
Management 5.0
Jan-00 Bridgeview G.C. 9 $28 25,000 Columbus, OH Gary Grube/
Marlynn Greene Columbus State C.C. NA
Jan-00 Charlotte Golf Links 72 $44 148,000-
160,000 Charlotte, NC Charlotte Golf Services IRI Golf Group 24.0
Jan-00 Divide G.C. 72 $44 148,000-
160,000 Matthews, NC Charlotte Golf Services IRI Golf Group 24.0
Jan-00 Hunters Creek Plantation 27 $40 40,000 Greenwood, SC LinksCorp. Sam Randazzo Family 3.9 12.0%
Jan-00 Le Triomphe Golf & C.C 18 $55 32,000 Broussard, LA Nichiei Acadiana Golf 8.5 12.0%
]an-00 Stone Harbor G.C 18 $45 25,000 Cape May Ct.
-$95 House, NJ Jersey Devil Crown Golf
Properties 4.0
Jan-00 Tradition G.C. 72 $65 148,000-
160,000 Charlotte, NC Charlotte Golf Services IRI Golf Group 24.0
Jan-00 Waterford G.C. 72 $40 148,000-
160,000 Rock Hill, SC Charlotte Golf Services IRI Golf Group 24.0
------------------------------------------------------------------------------------------------------------------------------------
Range: High 13.0%
Low 8.0%
Median 10.5%
</TABLE>
- 38 - DUFF & PHELPS, LLC
<PAGE>
GOLF TRUST OF AMERICA
DISPOSITION OF ASSETS
($'S IN MILLIONS)
<TABLE>
<CAPTION>
EST. 2001 FIRST
NOI (less UNION'S ACTUAL GROSS IMPLIED
DATE INITIAL $6.2M in PROJECTED SALE PRICES CAP RATE
# OF BUILT/ PURCHASE CAP in G&A, CAP RATE ON SOLD ON 2001
COURSE NAME HOLES CITY, STATE REDESIGNED TYPE PRICE FEE prorata) ON 2001 NOI PROPERTIES NOI
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Legends Resort 54 Myrtle Beach, SC 1990 Resort 43.1 10.47% 5.0 11.75% 89.4 10.74%
/92
Heritage Golf Club 18 Myrtle Beach, SC 1986 Resort 16.8 10.47% 2.0 (incl. above) (incl. above)
Oyster Bay 18 Sunset Beach, NC 1995 Resort 17.1 10.43% 2.0 (incl. above) (incl. above)
Tiburon Gulf Course 27 Omaha, NE 1999 Daily Fee 6.0 10.51% 0.6 (incl. above) (incl. above)
Royal New Kent 18 Williamsburg, VA 1986 Daily Fee 16.7 10.47% 2.0 10.8 37.96%
Stonehouse Golf Club 18 Williamsburg, VA 1996 Daily Fee 16.3 11.20% 2.1 (incl. above) (incl. above)
Black Bear Golf Club 18 Orlando, FL 1995 Daily Fee 4.8 10.50% 0.4 35.60%
Bonaventure 36 Ft. Lauderdale, FL 1970 Daily Fee 24.5 9.50% 2.3 18.65%
/78
Silverthorn C.C. 18 Tampa, FL 1994 Private 4.7 9.75% 0.4 4.3 9.41%
Olde Atlanta Golf Club 18 Atlanta, GA 1983 Daily Fee 7.6 10.47% 0.8 7.8 10.26%
Northgate S.C. 27 Houston, TX 1993 Private 12.6 10.47% 1.5 11.75%
The Woodlands 18 Gulf Shores, AL 1994 Resort 6.0 10.47% 0.7 6.4 10.94%
Innisbrook 72 Tampa, FL 1970 Resort 70.0 9.63% 8.9 12.50%
/98
Eagle Watch Golf Club 18 Atlanta, GA 1989 Daily Fee 6.4 10.20% 0.6 5.9 10.26%
Lost Oaks 18 Tampa, FL 1970 Daily Fee 5.9 9.75% 0.5 11.75%
Club in the Country 18 Kansas, KS 1980 Private 3.1 10.00% 0.2 2.7 7.52%
Stonehenge Golf Club 36 Columbia, SC 1974 Private 10.5 10.50% 1.0 11.75%
/97
Mystic Creek Golf Club 27 Dearborn, MI 1996 Daily Fee 10.0 10.00% 1.0 12.50%
Emerald Dunes 18 W. Palm Beach, FL 1990 Daily Fee 22.4 10.00% 2.4 11.75%
The Links at Polo Trace 18 Boynton Beach, FL 1989 Daily Fee 12.1 9.50% 1.1 11.75%
Cypress Creek C.C. 18 Boynton Beach, FL 1964 Daily Fee 4.2 10.00% 0.3 11.75%
Sandpiper Golf Course 18 Santa Barbara, CA 1972 Daily Fee 33.0 9.00% 3.1 11.75%
Persimmon Ridge G.C. 18 Louisville, KY 1989 Private 7.5 9.76% 0.7 5.2 13.46%
Eagle Ridge Resort 63 Galena, IL 1977 Resort 46.9 9.45% 4.5 11.75%
/97
Tierra Del Sol C.C. 18 Albuquerque, NM 1982 Daily Fee 3.6 10.50% 0.3 12.50%
Raintree Country Club 18 Akron, OH 1992 Daily Fee 4.6 10.50% 0.4 (incl. below) (incl. below)
Ohio Prestwick C.C. 18 Akron, OH 1972 Private 6.4 10.00% 0.6 10.7 9.39%
Osage National G.C. 27 Lake Ozark, MO 1992 Daily Fee 11.2 10.00% 1.1 8.0 13.75%
Sweetwater C.C. 18 Orlando, FL 1980 Private 4.8 10.00% 0.4 (incl. below) (incl. below)
Wekiva Golf Club 18 Orlando, FL 1975 Daily Fee 6.5 10.00% 0.6 10.0 10.00%
/83
Cooks Creek 18 Columbus, OH 1995 Daily Fee 6.1 10.00% 0.5 1.75%
Brentwood Golf & C.C. 18 Detroit, MI 1957 Daily Fee 7.1 10.20% 0.6 2.6 23.08%
Palm Desert C.C. 27 Palm Springs, CA 1957 Daily fee 5.8 10.25% 0.5 4.1 12.25%
Metamora G.C. 18 Metamora, MI 1957 Daily Fee 5.9 10.25% 0.5 4.9 10.14%
The Pete Dye G.C. 18 WV 1957 Resort 10.0 10.50% 1.0 11.75%
====================================================================================================================================
Total 846 45 courses 480.2 50.6 172.6
-----------------------------------------------------------------------------------------------------------------------------------
Median 10.20% 11.75% 10.50%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: First Union Securities Analyst Report, August 9, 2001
Note: Due to outlier indications for cap rates (for projected cap rates and
implied cap rates), Duff & Phelps utilized a median indication for its analysis.
- 39 - DUFF & PHELPS, LLC
<PAGE>
GOTHAM GOLF PARTNERS
IMPLIED CAPITALIZATION ANALYSIS
PROPERTIES OWNED BY GGP
<TABLE>
<CAPTION>
SALE SALE STABILIZED IMPLIED
ASSET DATE PRICE NOI* CAP RATE SOURCE
---------------------- ----------- ----------- ------------ ----------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selling Golf Courses: (SUBSEQUENTLY TERMINATED)
California Golf Club 03/16/01 3,900,000 364,957 9.4% Purchase/Sale Agreement with Dartmouth Gen. Ins. Co.
Miami National Golf 03/16/01 5,850,000 608,254 10.4% Purchase/Sale Agreement with Dartmouth Gen. Ins. Co.
Club
St. James Golf Club 03/16/01 5,750,000 329,303 5.7% Purchase/Sale Agreement with Dartmouth Gen. Ins. Co.
<CAPTION>
PURCHASE PURCHASE STABILIZED IMPLIED
ASSET DATE PRICE NOI* CAP RATE SOURCE
---------------------- ----------- ----------- ------------ ----------- -----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Buying Golf Courses:
The Bridges Golf Club 08/23/00 5,550,000 792,425 14.3% Currently leasing with the option to buy.
</TABLE>
* Estimated by Duff & Phelps.
Calculation assumes the subtraction Of maintenance capex and golf cart lease
from COI for each respective course. Assumption: Maintenance capex at 2.0% of
course revenues; Golf cart lease at 4.8% of course revenues. All calculations
based on representative levels of revenues and COI.
- 40 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
================================================================================
AMERICAN SKIING COMPANY
Symbol: SKI Exchange: NYSE Close: 0.97 Date: 08/16/01
BUSINESS OVERVIEW
American Skiing Company (ASC), formed in 1997, is a holding company that,
through various subsidiaries, operates in two business segments, ski
resorts and real estate development. ASC owns and operates the following
ski resorts: Sugarloaf/USA and Sunday River in Maine, Attitash Bear Peak in
New Hampshire, Killington, Mount Snow/Haystack and Sugarbush in Vermont,
The Canyons in Utah, Steamboat Ski & Resort Corporation in Colorado, and
Heavenly Valley Ski & Resort Corporation in California/Nevada. The Company
performs its real estate development through its wholly owned subsidiary,
American Skiing Company Resort Properties, Inc. (Resort Properties), and
Resort Properties' subsidiaries, including Grand Summit Resort Properties,
Inc. (GSRP) and Canyons Resort Properties, Inc. The Company owns and
operates resort facilities, real estate development companies, golf
courses, ski and golf schools, retail shops and other related companies.
The Company's resort business is derived primarily from its ownership and
operation of nine ski resorts, several of which are among the largest in
the United States. The Company currently has at least one resort located in
each major skiing market in the United States. During the 1999-00 ski
season, its resorts generated approximately 5 million skier visits,
representing approximately 9.6% of total skier visits in the United States.
The Company's resort revenues are derived from a wide variety of sources
and include lift ticket sales, food and beverage sales, retail sales
including ski rentals and repairs, skier development, lodging and property
management, golf and other summer activities and miscellaneous other
sources. Lift ticket sales represent the single largest source of resort
revenues and produced approximately 45% of total resort operations revenue
for fiscal 2000.
----------------------------------------------------------------------------
($ IN MILLIONS)
----------------------------------------------------------------------------
INCOME STATEMENT LTM 2001 FY 2000 SUMMARY
--------------------------------------- --------------------------
Revenue $435.0 $424.1 GOLF COURSES: 5
EBITDA 53.7 47.0 HQTRS: Bethel, Maine
EBIT 7.6 (0.0) CEO: William (B.J.) Fair
Net Income (35.7) (30.1) MARKET CAP: $29.3 million
Diluted EPS (In $'s) ($2.07) ($1.69) EV / EBITDA: 11.2x
[GRAPH]
- 41 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
================================================================================
CLUBHAUS, PLC
Symbol: CHA Exchange: London Close: 0.32 Date: 08/16/01
BRITISH POUNDS
BUSINESS OVERVIEW
Clubhaus owns and operates leisure businesses and facilities located in
both the United Kingdom and Continental Europe. The company retails its own
brands of golf equipments and clothings. With twenty-one clubs across the
United Kingdom, and in Germany, France and Spain and with more than 26,000
members, Clubhaus is one of the largest pan-European owners and operators
of golf and health and fitness clubs in Europe. The company's clubs are
located near majority cities and towns across Europe with the resort
locations situated in areas of natural beauty including London and other
key business and population centres. As well as providing the company's
members and visiting guests with access to a variety of courses, the
company also provides a full range of golf-related services. Golf
merchandise is available from pro shops located at each of the company's
twenty-one golf clubs.
"The Collection", the company's mail order catalogue, includes a broad
range of golf merchandise, including its private label IKARUS brand of
clubs, bags, gloves, clothing and accessories. The company also caters
specifically to corporate golf outings. Other activities and facilities
offered at a majority of the courses include driving ranges, practice
areas, equipment rental, golf lessons, and conference and banqueting
facilities. Clubhaus Health & Fitness Clubs are establishing a reputation
within the industry for offering state-of-the-art facilities offering a
comprehensive range of equipment linked to the very latest Member
Motivation tracking system. Each of the facilities is built to the highest
standards of the Club's existing character and offers a unique combination
of motivation and relaxation activities and services. The Clubs are adult
oriented, but are committed to providing a welcoming environment for Member
families and guests, including supervised childcare centres.
----------------------------------------------------------------------------
($ IN MILLIONS) - BRITISH POUNDS
----------------------------------------------------------------------------
INCOME STATEMENT 2000 1999 SUMMARY
-------------------------------------- -----------------------------
Revenue $45.2 $33.7 GOLF COURSES: 21 golf clubs/
EBITDA 18.2 12.9 courses
EBIT 15.1 10.9 HQTRS: London, UK
Net Income 8.7 7.4 CHAIRMAN: Robert Bourne
Diluted EPS (In $'s) $0.08 $0.07 MARKET CAP: $32.3 million
EV / EBITDA: 7.0x
[GRAPH]
- 42 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
================================================================================
CLUBLINK, CORP.
Symbol: LNK Exchange: Toronto Close: 6.20 Date: 08/16/01
CANADIAN DOLLARS
BUSINESS OVERVIEW
ClubLink Corporation ("ClubLink") is Canada's largest owner, operator and
developer of high quality golf course and resort properties driven by golf.
ClubLink is a public company, traded on the Toronto Stock Exchange (Symbol:
LNK). Since it commenced operations in 1994, ClubLink has built a
significant portfolio of 30 18-hole and seven 9-hole golf courses at 26
locations in Ontario and Quebec, and five resorts in Muskoka, Ontario.
These include Glen Abbey Golf Club, the top ranked premium public course in
Canada and home of the 2000 PGA Tour Bell Canadian Open, and the Curtis
Strange/Doug Carrick-designed King Valley Golf Club, the 12th-ranked course
in Canada. ClubLink owns development sites for eight more golf courses.
ClubLink has ownership interests in GolfNorth Properties Inc. of Cambridge,
Ontario, which owns and operates 10 golf courses in southern Ontario. The
Corporation also has investments in courses located in Virginia, South
Carolina and Georgia. ClubCorp. Inc. of Dallas, Texas and ClubLink
established a strategic alliance in January 1999.
ClubCorp, the world's largest owner and operator of golf courses and
private clubs owns 26 percent of ClubLink's shares. ClubCorp's
international collection of clubs includes Mission Hills Country Club,
Indian Wells Country Club, Firestone Country Club, and Pinehurst Resort,
the world's largest golf resort. ClubLink Members have reciprocal
privileges to more than 230 ClubCorp properties worldwide, ranging from
premier country clubs and world-class destination resorts to outstanding
city clubs, athletic clubs and exceptional semi-private golf courses.
ClubLink is focused on growth based on strategic acquisitions and
development of golf properties which are complementary to existing or
targeted markets. ClubLink's unique marketing programs, operational
expertise and financial strength make it the leader in consolidating the
golf industry.
A strong management team has built a solid foundation for the significant
growth that lies ahead--the building of our membership, the development of
loyal daily-fee guests at your public facilities, the development and
acquisition of new facilities, the honing of operational procedures, the
development of our people, the building of key strategic alliances, and the
continual strengthening of our balance sheet.
----------------------------------------------------------------------------
($ IN MILLIONS) - CANADIAN DOLLARS
----------------------------------------------------------------------------
INCOME STATEMENT LTM 2001 FY 2000 SUMMARY
--------------------------------------- ---------------------------
Revenue $105.8 $105.7 GOLF COURSES: 30
EBITDA 25.2 25.4 HQTRS: King City, Ontario,
EBIT 15.7 16.2 Canada
Net Income 4.7 6.9 PRESIDENT: Bruce Simmonds
Diluted EPS (In $'s) $ 0.21 $ 0.33 MARKET CAP: $127.0 million
EV / EBITDA: 14.1x
[GRAPH]
- 43 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
================================================================================
CROWN SPORTS PLC
Symbol: CSP Exchange: London Close: 0.25 Date: 08/16/01
BRITISH POUNDS
BUSINESS OVERVIEW
Crown Sports, formerly known as Golf Club Holdings PLC, operates and
provides golf club, leisure and health facilities. As of December 31, 2000
the company operated 33 health clubs and 8 golf clubs, with 65,000 members
in the United Kingdom. Crown Sports Clubs provide a friendly and
comfortable environment where members can maintain good health and enjoy
life to the full, whether it be in the gym or pool, participating classes,
playing golf or socializing. The company was officially admitted to the UK
Listing Authority in February 2001, and the company's stock began to trade
on the London Stock Exchange (FTSE). The company's seven core golf clubs
grew to 4,637 members in 2000 from 4,268 in 1999. The handover of the
Lambourne Club was successfully completed with the club being managed to
the end of the contract period December 2000. Continued significant
investment occurred in the seven core golf clubs with particular emphasis
on course improvements. The successful purchase of Dragon added some 31,000
members and 15 health clubs to the company's Club Division.
The company recently announced the acquisition of four Axis Health clubs to
add to the Dragons network. The company also announced the acquisition of
the management contract business of Fitness Express to add a further 15,000
members to the Clubs Division. Fitness Express, manages 14 contracts mainly
in hotels. The company believes the sports, fitness and golf markets look
set for continued growth as consumers' interest in healthy living, sports
and fitness activity rises in tandem with disposable incomes. The company's
golf clubs include Broke Hill Orpington in Kent, UK, The Chases Cannock, in
Staffordshire, UK, the Vale in Evesham, UK, Wickman Park in Fareham, UK,
Vale Royal Abbey in Northwich, UK, Batchworth Park in Rickmansworth, UK,
Eccleston Park in St. Helens, UK and South Winchester in Winchester, UK.
----------------------------------------------------------------------------
($ IN MILLIONS) - BRITISH POUNDS
----------------------------------------------------------------------------
INCOME STATEMENT 2000 1999 SUMMARY
------------------------------------- ------------------------------
Revenue $ 3.5 $3.6 GOLF COURSES: 8 golf courses/
EBITDA 0.6 0.5 clubs
EBIT 0.4 0.3 HQTRS: London, UK
Net Income 0.4 0.2 CHAIRMAN: Jeff Chapman
Diluted EPS (In $'s) $0.00 ($0.01) MARKET CAP: $63.2 million
EV / EBITDA: Not Meaningful
[GRAPH]
- 44 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
================================================================================
PGA EUROPEAN TOUR COURSES PLC
Symbol: PGA Exchange: London Close: 0.47 Date: 08/16/01
BRITISH POUNDS
BUSINESS OVERVIEW
PGA European Tour Courses own and develop flagship golf courses around
Europe. It is our aim to provide both the professional and amateur golfer
with an outstanding experience. The company began life in 1987 as PGA
European Tour Properties. In 1992 it combined with the International
Management Group to create PGA European Tour Golf Courses (IMG) Ltd. It was
in 1996 when the reverse take-over of Union Square PLC led to the creation
of PGA European Tour Courses PLC and a listing on the London Stock
Exchange. In 1999, the company fought off a takeover bid by Golf Club
Holdings, which is now currently named Crown Sports PLC. The company
mission is to own and operate courses on which professional events are
hosted under the auspices of the European Tour. The company's golf courses
include, Golf and Country Club Fleesensee in Germany, Kungsangen Golf Club
in Sweden, PGA Golf de Catalunya in Spain, Quinta do Lago, Portugal, and
Woburn Golf and Country Club in England.
Working on projects all around Europe, often with joint venture partners,
the company develops flagship golf courses. The company oversees the design
and construction stages, and then open and operate the club. From
conception to operational maturity is often a lengthy process, but there
are now 5 PGA European Tour Course venues. Currently the company is looking
at development potential and investment opportunities for peripheral land
across all the company's facilities.
----------------------------------------------------------------------------
($ IN MILLIONS) - BRITISH POUNDS
----------------------------------------------------------------------------
INCOME STATEMENT 2000 1999 SUMMARY
------------------------------------- ------------------------------
Revenue $ 8.4 $ 7.5 GOLF COURSES: 5
EBITDA 2.4 2.0 HQTRS: Uxbridge Middlesex, UK
EBIT 2.0 1.5 CHAIRMAN: Neil Coles
Net Income 1.7 1.3 MARKET CAP: $26.3 million
Diluted EPS (In $'s) $0.03 $0.02 EV / EBITDA: 14.0x
[GRAPH]
- 45 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
==============================----==============================================
GOLF TRUST OF AMERICA
Symbol: GTA Exchange: NYSE Close: 8.36 Date: 08/16/01
BUSINESS OVERVIEW
Golf Trust of America, Inc., incorporated in 1996, is a real estate
investment trust (REIT) formed to capitalize upon consolidation
opportunities in the ownership of upscale golf courses in the United
States. Since inception, the trust's principal business strategy has been
to acquire high quality golf courses and then lease them to qualified third
party operators, including affiliates of the sellers. Against a backdrop of
challenging business conditions for the golf course industry characterized
by a supply and demand imbalance and difficulty in raising debt and equity
capital several of GTA's tenants defaulted on their leases over the past
few years. Based on recent financial information provided to the trust by
other lessees, financial conditions at their golf courses are deteriorating
to hi point where they are not generating sufficient cash flow to cover
their rent obligations. As a result, after a review of strategic
alternatives begun in February 2000, the stockholders approved to liquidate
the company. The company is currently selling its golf courses at the best
prices obtainable in an orderly liquidation pursuant to the plan of
liquidation.
As of August 10, 2001, the company holds participating interests in 18.5
golf courses and direct controlling interests in 7.5 golf courses, 22 of
the 26 Golf Courses are owned by the Company. In connection with the Plan
of Liquidation, the company entered into a sale agreement with Legends Golf
Management, to sell to the affiliate up to 12.4 Golf Courses leased by
Legend. On July 31, 2001, the company closed on the sale of 6.5 golf
courses to Legends, including the Myrtle Beach courses, for $89.4 million,
consisting of cash, a redemption of 3.7 million shares/OP units valued at
$44.7 million and a release of obligations to pay the company of $6.6
million for obligations under working capital loans. As of August 10, 2001,
the company has closed on the sale of 21.0 Golf Courses for gross sales
prices totaling $158.6 million, resulting in a net gain of $31.1 million.
In addition, the company has obtained signed letters of intent to sell an
additional 10.5 golf courses for an aggregate of $95.4 million.
----------------------------------------------------------------------------
($ IN MILLIONS)
----------------------------------------------------------------------------
INCOME STATEMENT LTM 2001 FY 2000 SUMMARY
---------------------------------------- --------------------------
Revenue $52.7 $55.5 GOLF COURSES: 26
EBITDA 34.5 47.3 HQTRS: Charleston, SC
EBIT 20.8 29.0 CEO: Bradley Blair II
Net Income (0.1) 5.1 MARKET CAP: $68.0 million
Diluted EPS (In $'s) ($0.18) $0.40 EV / EBITDA: 9.7X
[GRAPH]
- 46 - DUFF & PHELPS, LLC
<PAGE>
COMPARABLE PUBLIC COMPANY ANALYSIS
================================================================================
NATIONAL GOLF PROPERTIES, INC.
Symbol: TEE Exchange: NYSE Close: 20.20 Date: 08/16/01
BUSINESS OVERVIEW
National Golf Properties, Inc., which commenced operations on August 18,
1993, is self-administered real estate investment trust (REIT) specializing
in the ownership and acquisition of golf course properties with strong
revenue and cash flow growth potential, and leasing them to experienced and
creditworthy operators. National Golf is currently the largest publicly
traded golf course properties REIT, with a portfolio consisting of 145 golf
courses (the Golf Courses) in over 130 separate locations in 23 states. The
golf course also owns one participating mortgage loan, collateralized by a
mortgage on the golf course. In order to maintain qualification as a REIT,
the company's income must be derived from real property-related sources,
including rents from real property and generally excluding income from the
operation of a golf course. Accordingly, the company is generally precluded
from operating golf courses and, as a consequence, leases the Golf Courses
to experienced and golf course operators.
All but four of the Golf Courses in the company's portfolio are currently
leased to the company's sister company, American Golf Corporation (AGC),
pursuant to long-term triple net leases (the Leases). Recently, the
company's stock fell over 20 percent in a two day span after the company
announced (Aug. 14, '01) that sister company, AGC, had suffered a
significant loss in the first half of the year and was technically in
default on its debt. As a result, National Golf was also put in default on
its credit line. As reported on Bloomberg News, the drop in the company's
shares highlights the risks REITs take when they lease most of their
properties to one tenant. Company management has indicated that American
Golf's financial difficulties were related to stormy weather, continued
economic weakness, and excess supply in certain markets. News of the
technical default led Merrill Lynch to downgrade the company's stock from a
"Buy" to "Neutral" rating. CSFB continued its "Hold" rating on the stock
after the news.
AGC currently manages and operates 271 golf courses and related facilities
in 29 states. In addition, AGC, through its subsidiary American Golf (U.K.)
Limited, manages 36 golf courses and related facilities in the United
Kingdom. AGC operates a diverse portfolio of golf courses for a variety of
golf course owners including municipalities, counties and others. Including
the Golf Courses, AGC manages 235 daily fee golf courses and 94 private
club courses. AGC oversees the management and operations of championship
golf courses throughout the United States and manages municipal golf
courses for such cities as Atlanta, New York and San Diego and for the
County of Los Angeles.
----------------------------------------------------------------------------
($ IN MILLIONS)
----------------------------------------------------------------------------
INCOME STATEMENT LTM 2001 FY 2000 SUMMARY
--------------------------------------- ---------------------------
Revenue $120.8 $118.0 GOLF COURSES: 145
EBITDA 115.3 112.3 HQTRS: Santa Monica, CA
EBIT 75.8 72.2 CHAIRMAN: David Price
Net Income 22.8 19.2 MARKET CAP: $327.7 million
Diluted EPS (In $'s) $ 1.73 $ 1.47 EV / EBITDA: 7.8x
[GRAPH]
- 47 - DUFF & PHELPS, LLC
</TEXT>
</DOCUMENT>