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By Kyle Darbyson
After falling into foreclosure, the new owners of Boot Ranch have the Texas club ready to high-step into a new era
Boot Ranch had nearly everything going for it: 2,000 pristine acres in Texas Hill Country, an unprecedented population base to draw from, even the pedigree of golf major champion Hal Sutton. Unfortunately, it lacked timing.
The exclusive private club in Fredericksburg, located just an hour north of San Antonio, opened to much fanfare in 2006. It promised to be a luxurious master-planned community centered around a championship, 18-hole golf course designed by Sutton himself. Just as the development was gaining momentum, however, the economic crash of 2008 virtually wiped out demand for second homes. With the club struggling, Lehman Brothers was forced to foreclose on the property in 2010.
It’s a story that’s been told countless times across the country. For many, it ends in shuttered clubhouses and overgrown fairways. But not Boot Ranch. Now, with new, well-capitalized owners, the original vision of this community can finally be realized.
The person charged with overseeing Boot Ranch’s renaissance is Todd Huizinga, a long-time industry vet who has had stints at Stone Canyon Club and Superstition Mountain in Arizona. He came to Boot Ranch while Lehman Brothers still owned the club, a move some might consider risky. But Huizinga says he believed strongly in the project and the motivations of Lehman. “I just really got a sense that they were committed,” he notes.
Often, lenders left holding the note on a bankrupt golf course will spend the absolute minimum in accordance with their fiduciary responsibilities. At Boot Ranch, Lehman invested millions. “I think they knew they had a special place here,” Huizinga says.
The bulk of the investment came in the form of the Ranch Club, a $4 million fitness and lifestyle center that endowed the club with amenities like swimming, casual dining and additional social space. “It was desperately needed,” Huizinga says. Up to that point, the club only offered amenities like golf and skeet shooting—not exactly the kinds of activities that mom and the kids typically engage in. “We were really looking to grow the family component of the operation,” he adds.
That sizeable investment turned out to be a wise one by Lehman. The firm never intended to keep the asset, and the addition of the Ranch Club piqued the interest of several parties. “It didn’t hurt that Boot Ranch had just finished its third consecutive year of growth,” Huizinga adds.
Mark Enderle is a partner at Terra Verde, a real estate investment firm specializing in opportunistic real estate plays. He says Boot Ranch was on his company’s radar for some time. “I’ve always been excited about this piece of property,” he says. The development fits perfectly into his firm’s investment ethos (see sidebar, “Window of Opportunity”). “You’ve got 20 million people within a four-hour drive, so it’s really in an ideal spot.”
Once word spread that Lehman was looking to unload, Enderle and his firm partnered with Wheelock Street Capital to buy Boot Ranch. The due diligence took almost a year, with the sale announced in late August 2015. “We spent a lot of time wrapping our heads around the project, getting an idea of what we could bring to the table as owners,” Enderle says.
One thing the partnership does bring is cash, which is of the utmost importance in this type of deal. “Until you reach a critical mass, you need to be comfortable absorbing losses,” says Enderle, who estimates the club needs around 300 members to be profitable. Of course, the 175 members now paying to play at Boot Ranch expect a top-tier experience regardless of the financials. “So we have to be prepared to continue to deliver that to them,” he adds.
As new owners, Terra Verde and Wheelock Street Capital wanted to be a voice of reassurance for the existing homeowners. The prevailing fear was the new ownership group would open up the development to the public, with hotels, spas and more. “People were terrified that it would become a transient community,” Huizinga remembers.
“From the get-go, our message was that we were there to deliver on the experience homeowners at Boot Ranch have always been promised,” Enderle says. With billions in the coffers, it meant someone finally had the capital to make it happen.
The owners also needed to show that they weren’t there to cut corners or make an easy buck. There was some concern Terra Verde and Wheelock would capitalize on their bargain purchase price and offer homesites at significant discounts. “We have homes here north of $9 million,” says Enderle. “People have made huge investments in this place, and we needed to show that those investments were safe.”
To do that, capital expenditures were announced to both the golf course and the club’s operational budgets. “The course is 10 years old, [so] it was time for a refresh,” says Huizinga. A $1.9 million influx will pay for bunkers to be redone and all 18 greens to be rebuilt.
On the operations side, Huizinga expects his marketing budget to double or even triple. “I think we’ve always done a good job of marketing the club, but to be honest resources have always been limited.” Those more robust budgets will allow Huizinga to work with an outside agency for the first time, with plans to present the board with a full-scale, 12-month marketing program.
The club also recently announced plans for a second phase of development, with even more family-centric amenities like a spa and a massive network of hiking trails. “We realize that with a property like this, we aren’t in the real estate business, we’re in the lifestyle business,” Huizinga says.
Collectively, the investments are aimed at reassuring prospects that Boot Ranch is finally on sound financial footing and that Enderle and his firm are in it for the long haul. “We have skin in this game,” he says. “We have no alternative but to succeed.”
Now, all signs point to Boot Ranch doing just that. There are 14 homes currently under construction, with 14 more in the final stages of approval. “We’ve added over 100 members in the last couple of years,” Huizinga adds.
Innovative programs like one-eighth-share memberships are accelerating growth, as well. Boot Ranch officials see these fractional owners as high-value targets to migrate to full ownership. “I say give them a great experience and they should organically grow to become full members,” Huizinga says.
For Enderle, the real success of this deal won’t necessarily be measured on a balance sheet. “Hal Sutton’s original vision was spectacular, and I feel we have all the pieces in place to finally bring that vision to life.”
Kyle Darbyson is a Vancouver-based freelance writer.