CMBS investors, who buy bonds backed by loans tied to shopping centers, hotels and apartment buildings, are also shunning debt linked to the sport, after suffering losses from deals made before 2007.
Trump is buying the Doral Golf Resort & Spa out of bankruptcy five years after Morgan Stanley acquired it as part of the $6.7 billion purchase of CNL Hotels & Resorts Inc.
A $1 billion loan tied to the property was parceled inside a commercial mortgage bond in 2006, according to data compiled by Bloomberg. A lender group including New York-based hedge fund Paulson & Co. and Winthrop Realty Trust seized control of the CNL Hotel & Resort properties including the Doral from New York- based Morgan Stanley last year before putting it into Chapter 11 bankruptcy.
Bundling loans on golf courses into CMBS isn't "likely" to be repeated because too many investors realized "huge losses" and "don't want to make that bet again," according to Chuck Elfsten, president and chief executive officer of commercial real estate lender Ocean Pacific Capital.
"Ninety percent of golf CMBS investors will not touch golf courses with a 10 foot pole, maybe even with a 20 foot pole," Elfsten of Irvine, California-based Ocean Pacific Capital, said in a telephone interview.
About 80 percent of golf course deals recorded last year were paid for in cash or with private equity, according to Ekovich of Marcus & Millichap. Course purchasing re-emerged in the other 20 percent in special circumstances such as seller financing and localized lending, Ekovich said.
Bobby Silva, vice president of business development at Texas-based Escalante Golf, has acquired eight 18-hole golf courses since 2008 and said he purchased one course through seller financing. If sellers give that option, they usually carry up to 75 percent of loan value with an interest rate between five and seven percent, according to Silva.
"It's not what you could get from a local institution but it's still pretty competitive," Silva said in a telephone interview.
Few lenders take this route because they don't want to finance their own foreclosed assets, Marcus & Millichap Golf & Resort Properties wrote in a semi-annual report.
Wells Fargo & Co. has taken back "a dozen or so golf courses since 2008," according to Ken Kasten, asset manager within a bank unit that oversees some real estate. Some of them have been sold while the others are managed and operated by Wells Fargo, Kasten said. Whatever the case, the San Francisco- based lender doesn't offer any type of seller financing for golf-course assets, according to Kasten.