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Golf Trust's Decision to Sell the Struggling Innisbrook Resort
 Sharply Criticized by Shareholders; Likened to a Fire Sale
By Kyle Stock, The Post and Courier, Charleston, S.C.McClatchy-Tribune Regional News

Jul. 17, 2007 - The owner of the Woodlands Resort & Inn in Summerville closed a $35 million cash deal Monday to buy a struggling Florida resort from Charleston-based Golf Trust of America Inc. amid objections from a large Golf Trust shareholder.

Washington-based Salamander Hospitality LLC, which snapped up the Woodlands a year ago, inked an agreement to buy the Innisbrook Resort and Golf Club June 25. The sale included four golf courses, five restaurants, 60,000 square feet of meeting space and 625 rental condominiums.

"It's a unique property and I think it really rounds out who we are and what we're about," said Salamander founder Sheila Johnson.

In addition to the Woodlands, Salamander also manages independent hotels in Blacksburg, Va., and New Orleans. It also owns 340 acres just west of the nation's capital, where it plans to build a resort, spa and market.

Johnson, co-founder of Black Entertainment Television, is also part owner of the NHL's Washington Capitals, the NBA's Washington Wizards and the WNBA's Washington Mystics.

Salamander's president, Prem Devadas, said the company will operate Innisbrook independently and attempt to turn around bookings and tee times with a new spa and an ambitious renovation plan.

Golf Trust's decision to sell was sharply criticized by one of its biggest shareholders. California hedge fund Odyssey Value Advisors LLC, which owns 7.6 percent of the course owner, blasted executives in an Securities and Exchange Commission filing last week, likening the Innisbrook deal to a "fire sale."

They also said the Golf Trust board rubber-stamped huge salaries while the company's stock price tanked.

Bradley Blair II, chairman and chief executive officer of Golf Trust, defended the sale.

"Over the last couple of years, the company's board of directors has evaluated numerous options on the question of selling, joint venturing or recapitalizing the Innisbrook Resort and Golf Club and concluded that it was in the best interests of the shareholders of the company to pursue the sale of the resort to Sheila Johnson's Salamander organization," Blair said in a statement Monday.

Bill Vlahos, managing partner of Odyssey, declined to say Monday what his legal options are now that the property has changed hands.

Aside from two layouts Golf Trust owns in Columbia, Innisbrook was the last substantial chunk of the company, which has been liquidating its pool of almost 50 courses since 2001.

The company tried to sell the Florida property for years but struggled to find a financially stable buyer willing to offer close to its asking price. Innisbrook fetched $79 million a decade ago, but was recently valued at around $39 million.

In a recent filing with the SEC, Golf Trust said the resort has grappled with a "troubled past" and now has a backlog of deferred maintenance.

Golf Trust has been running Innisbrook since late last year, after agreeing to pay a $5.6 million fee to sever its ties with Westin Management Co.

In the first three months of this year, Golf Trust sold 34 percent fewer meals and recorded an 8 percent drop in golf rounds played at the property and at its two Midlands courses.

Also, Innisbrook rented 27 percent fewer rooms, though it ticked up its average nightly rate 15 percent to $616.

Shares of Golf Trust closed Monday at $2.40, down 7 percent since the resort sale was announced June 25, but up 63 percent year-to-date.

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Copyright (c) 2007, The Post and Courier, Charleston, S.C.

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