Annual report pursuant to Section 13 and 15(d)

PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

v3.19.1
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
 12 Months Ended
Dec. 31, 2018
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

The following table summarizes the Company's property and equipment:

 
December 31, 2018
 
December 31, 2017
 
Gross Carrying Amount
 
Accumulated Depreciation
 
Net Carrying Value
 
Gross Carrying Amount
 
Accumulated Depreciation
 
Net Carrying Value
Land
$
6,747

 
$
—

 
$
6,747

 
$
88,251

 
$
—

 
$
88,251

Buildings and improvements
78,833

 
(30,540
)
 
48,293

 
154,769

 
(52,636
)
 
102,133

Furniture, fixtures and equipment
26,726

 
(16,729
)
 
9,997

 
33,109

 
(23,451
)
 
9,658

Capital leases - equipment
28,745

 
(12,843
)
 
15,902

 
24,949

 
(8,649
)
 
16,300

Construction in progress
51,666

 
—

 
51,666

 
24,916

 
—

 
24,916

Total Property and Equipment
$
192,717

 
$
(60,112
)
 
$
132,605

 
$
325,994

 
$
(84,736
)
 
$
241,258


Depreciation is calculated on a straight line basis using the estimated useful lives detailed in Note 2. Depreciation expense, which included amortization of assets recorded under capital leases, was $16.0 million, $21.0 million and $23.4 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Below is a summary of the activity related to leased and managed Traditional Golf properties.
Date
 
Location
 
Leased or Managed Property
 
Description
May 2017
 
California
 
Managed
 
agreement expired
December 2017
 
Oklahoma
 
Leased
 
agreement expired
February 2018
 
Oklahoma
 
Leased
 
agreement terminated
June 2018
 
California
 
Leased
 
agreement terminated, 10 year management agreement executed
September 2018
 
Texas
 
Leased
 
agreement terminated
November 2018
 
California
 
Leased
 
agreement expired
December 2018
 
Michigan
 
Managed
 
agreement terminated, course closing


In December 2017, the Company closed on the sale of a golf property in Oregon for $1.1 million. We recognized a loss of $0.5 million on the sale which is included in other income (loss), net in the Consolidated Statements of Operations.

In December 2017, the Company closed on the purchase of land in Raleigh, North Carolina for $5.0 million for the construction of an Entertainment Golf venue.

On March 7, 2018, the Company announced it was actively pursuing the sale of 26 owned Traditional Golf properties in order to generate capital for reinvestment in the Entertainment Golf business. The assets and associated liabilities are reported on the Consolidated Balance Sheets as “Real estate assets, held-for-sale, net” and “Real estate liabilities, held-for-sale,” respectively. See Note 15 for additional information.

The real estate assets, held-for-sale, net are reported at a carrying value of $75.9 million and include $42.5 million of land, $31.8 million of buildings and improvements, $2.1 million of furniture, fixtures and equipment, and $1.0 million of other related assets, partially offset by $1.5 million of accumulated impairment. The real estate liabilities, held-for-sale are reported at a carrying value of $2.9 million and include golf course liabilities to be assumed, primarily prepaid membership dues.

In July 2018, the Company sold one private golf property in Georgia for a sale price of $3.5 million resulting in net proceeds of $3.2 million after adjusting for liabilities assumed by the buyer, primarily related to prepaid dues. This resulted in a net loss on sale of $0.1 million based on the carrying value of net assets.

In October 2018, we reclassified a golf property in New Mexico from held-for sale to held-and-used and recorded catch-up depreciation expense.

In December 2018, the Company completed sales on an additional twelve golf properties for a sale price of $86.2 million resulting in net proceeds of $73.5 million, inclusive of transaction costs of $1.2 million. The difference between the sales price and the net proceeds was primarily due to prepaid membership dues that we are obligated to remit to the buyer. The Company received proceeds of $75.7 million as of December 31, 2018 and has recorded $2.2 million of net payables related to the sales, which is expected to be settled in the first quarter of 2019. The golf properties had a total carrying value of $62.7 million and resulted in a gain of $10.8 million. The gain is recorded in other income, net on the Consolidated Statement of Operations. The proceeds from the sale plus cash on hand were used to prepay the Traditional Golf term loan, see Note 7 for additional information. The Company entered into management agreements on eight of these golf properties.