Big Burke announcement

[fbrissette]

DoublePlanker, ASAIK, the goal of the receiver is to clean up the mess, sell both resorts and refund the money left the investors. To me, it means that somewhere down the line, someone will buy Burke (including the hotel) at a highly discounted rate.

To eventually sell the resort, you have to operate it in the mean time.

In the long run, I think this will positive for Burke.

 

[sull1102]

In the long run, I think this will positive for Burke.

Only if there is actually a buyer out there. That hotel might make it tough for BMA to run the place.

 

[DoublePlanker]

DoublePlanker, ASAIK, the goal of the receiver is to clean up the mess, sell both resorts and refund the money left the investors. To me, it means that somewhere down the line, someone will buy Burke (including the hotel) at a highly discounted rate.

To eventually sell the resort, you have to operate it in the mean time.

In the long run, I think this will positive for Burke.

I understand that. I hope it will be a positive outcome. Certainly a great step to rid the place of the Q. Its just that Burke has been unprofitable forever. The receiver is not going to lose money. They will not do capital investments so the crappy snowmaking remains. How will they operate the ski area profitably when others perpetually fail?

 

[fbrissette]

I think the key to run Burke profitably is the hotel. The future buyer will get the hotel for next to nothing and he might be able to profitably run it, something that appeared impossible to do if you had to finance its construction.

 

[VTKilarney]

I think the key to run Burke profitably is the hotel. The future buyer will get the hotel for next to nothing and he might be able to profitably run it, something that appeared impossible to do if you had to finance its construction.

Agreed. The hotel will sell for much less than the actual construction costs. This will give the hotel a chance of running at a profit.

Even with the hotel Burke is not an easy sell. It has a lot going for it, but it's never going to make much money. IMHO, the best case scenario is that the ski area loses money but the hotel brings in enough to make a VERY modest profit overall.

 

[mbedle]

Thats the part that I can't seem to get my head around. You have approximately 110 limited partners combined with Quiros that owns the general partnership. If it sells for, say for half the construction costs, you are in effect cutting each of the limited partners ownership to 250K. I can't understand how that helps the investors, since it immediately would put their investment loses at 250K. It would seem better to sell the actual ski resort and transfer the general partnership in the hotel to the new ski resort owners. The price for Q Burke would increase based on the potential income from the hotel operations. The money generated by the sale would be going to the group of investors at AncBio - who appear to be the only ones that have lost money. I would also hope the the government would allow the EB-5 offering at Q Burke be modified to remove the pool and tennis facilities. The same would hold true for Jay Peak, with a substantially higher sale price.

 

[River19]

I used to do some consulting and number crunching on the side for some commercial real estate investors and as a quick rule of thumb they would touch a commercial property (hotel, office building, multi family etc.) for a price that didn't yield a cap rate of 10% min. Obviously there are many other reasons to buy a property such as Burke Mountain, but from the perspective these guys take things......the "resort" would have to have free cash flow of $2.5M per year to justify a $25M acquisition cost.....

Again, it will be worth whatever someone wants to pay for it and everyone establishes value a different way. The tricky part here is there is no established business at the hotel. So there is significant risk involved. It will come down to someone building multiple pro forma scenarios and then establishing a large margin of safety based on their risk tolerance and goals.

Whenever this thing sells, it will be complicated......but WTF do I know..........lol

 

[Smellytele]

The hotel will lose money on a yearly basis. Without any improvements to the ski area no one will want to stay at the hotel. With the ski area only operating late Dec to beginning of April who the hell is going to stay there late April through November? Mtn Bikers? I doubt it. Maybe a few weddings for locals.

 

[BenedictGomez]

At some of the passholder meetings there was a guy there name George Gulisano, self-introduced as "just a bean counter". He was (is?) the CFO for Q Resorts and was essentially Ari Sr's employee. On the BOD for Burke as the CFO as well. Spends half of his time in VT and the other half in Miami (shuffling money?).

Well this is certainly interesting info, hopefully the SEC is currently all up in this guy's business as well. Whoever looked at these transactions and accounting entries would have almost immediately known something is fishy.

The hotel will lose money on a yearly basis. Without any improvements to the ski area no one will want to stay at the hotel. With the ski area only operating late Dec to beginning of April who the hell is going to stay there late April through November?

Agreed.

Which is why this "project" was only built via "free money" and not investor funds.

 

[mbedle]

Well this is certainly interesting info, hopefully the SEC is currently all up in this guy's business as well. Whoever looked at these transactions and accounting entries would have almost immediately known something is fishy.



Agreed.

Which is why this "project" was only built via "free money" and not investor funds.

I am sure that you have said this before, but what is the hangup with the EB-5 program? I can't understand what you find so wrong with it. Just trying to get some insight into why you have such an issue with the, as you say, "free money".

To be honest, I don't think that the hotel project was actually a bad idea of Q Burke, to at least keep the place alive. Without it, it wouldn't be operating or if operating, on a shoe-string budget or at a loss.

 

[thetrailboss]

 

[MEtoVTSkier]

Update on Jay Peak and Q Burke One Week After SEC Raid and Takeover

http://www.newenglandskiindustry.com/viewstory.php?storyid=427

[FONT=Georgia, Arial]At Q Burke, receiver Michael Goldberg successfully added the Q Burke Hotel to the receivership, potentially paving the way to the opening of the idle facility. As of last week, Quiros’s son remains employed at Q Burke.[/FONT]

[FONT=Georgia, Arial][/FONT]

[FONT=Georgia, Arial]At a hearing on Friday, a judge allowed $750,000 to be borrowed to operate Q Burke for the next three months. Ironically, the judge is allowing various Jay Peak and Q Burke accounts to be co-mingled to fund the borrowing, an action similar to what the SEC accused Quiros and Stenger of doing. According to a court document, Q Burke may have over $1 million in Accounts Payable[/FONT][FONT=Georgia, Arial].[/FONT]

 

[thetrailboss]

Update on Jay Peak and Q Burke One Week After SEC Raid and Takeover

http://www.newenglandskiindustry.com/viewstory.php?storyid=427

That's pretty thin.


Sent from my iPhone using AlpineZone

 

[BenedictGomez]

I am sure that you have said this before, but what is the hangup with the EB-5 program? I can't understand what you find so wrong with it.

Sarcasm?

I assume this is sarcasm, but if my sarcasm detector is off, please go back to my initial posts in this thread and the other EB-5 thread(s) circa 2011 or 2012.

 

[BenedictGomez]

“The EB-5 funding clouds, I think, people’s judgment because you are not required to pay traditional principal and interest payments, which is usually substantial. So people tend to maybe overbuild and spend more than they should”

Golly, where have we heard this before!

I think I like this new receivership guy (even if he does wear a suit & tie in n.VT).

 

[mbedle]

Sarcasm?

I assume this is sarcasm, but if my sarcasm detector is off, please go back to my initial posts in this thread and the other EB-5 thread(s) circa 2011 or 2012.

It wasn't sarcasm - I honestly did not know what your issues were with the EB-5 program. I looked back at some of your earlier post and now understand your reasonings.

 

[SIKSKIER]

I can understand the issue with eb-5 money in reguard to traditional borrowing payback structuring but I sure cant fault any business for trying to take advantage(legally and the way it was suppossed to work) of this "FREE" money.And it definately brouught many construction and fulltime jobs with it..The problem is obviously the oversight of all that money.

 

[VTKilarney]

I can understand the issue with eb-5 money in reguard to traditional borrowing payback structuring but I sure cant fault any business for trying to take advantage(legally and the way it was suppossed to work) of this "FREE" money.And it definately brouught many construction and fulltime jobs with it..The problem is obviously the oversight of all that money.

You certainly can't blame business for (within the law) taking advantage of EB-5. The program may be flawed, but only a fool would ignore it for that reason.

 

[crank]

Just read a tweet from VPR that the Q is now gone and Burke is Burke. A positive development for sure.

 

[thetrailboss]

Also just heard on VPR that "two high-end hotel chains" are visiting the Hotel today.