Big Burke announcement

[Big Wave Dave]

sure its related via EB 5 and Stenger but unless you are telling me these projects are being sold to investors as a package, then no they are not. The fundraising for all of these projects is siloed (i.e. an investor knows where his money is going- it doesnt go to Stenger to then distribute to his projects as he pleases). Tell me if I misunderstand how Stenger and Quiros are marketing the NEK initiative.

So in line with that, Burke could successfully woo investors for a hotel, while the project in Newport never gets off the ground. True or false?
Trust me, I want this project to succeed, but the difference between building a hotel at burke, a basic amenity for a ski mountain that already has a wholly developed infrastructure, and the Newport projects, is vast. I never saw any of the Burke projects beyond the hotel happening, and definitely never thought this Newport thing would work.

 

[SkiRaceParent]

sure its related via EB 5 and Stenger but unless you are telling me these projects are being sold to investors as a package, then no they are not. The fundraising for all of these projects is siloed (i.e. an investor knows where his money is going- it doesnt go to Stenger to then distribute to his projects as he pleases). Tell me if I misunderstand how Stenger and Quiros are marketing the NEK initiative.

So in line with that, Burke could successfully woo investors for a hotel, while the project in Newport never gets off the ground. True or false?
Trust me, I want this project to succeed, but the difference between building a hotel at burke, a basic amenity for a ski mountain that already has a wholly developed infrastructure, and the Newport projects, is vast. I never saw any of the Burke projects beyond the hotel happening, and definitely never thought this Newport thing would work.

While I technically agree with everything you said, it still leaves me concerned about the current EB5 process and what they may not be telling us from a funding standpoint with the hotel at Burke. i also was a skeptic on all the additional projects at Burke except the hotel. I will leave the more detailed rebuttal to VTKillarney an TrailBoss since they seem to play more buttoned down skeptic than I do, but again, while agreeing with your post, I still remain concerned.

 

[thetrailboss]

I for one do get concerned when things are falling apart in Newport. These things ARE interrelated, unfortunately, in my opinion....hope the other shoe doesn't fall and further impact the Burke Hotel project.

I think that my initial optimism in 2012 was based on a presumption that with Bill talking about these big projects that he at least had SOME investors lined up and that they had SOME money. But it sounds like they went out, did a HUGE PR tour when they had $0 and anticipated that they would have no problem getting the investors. Now, with everyone and their grandfather trying the EB-5 approach for capital, and in perhaps more profitable sectors, and a decreasing number of available investors, it sounds like they are having a harder time than thought getting the money.

 

[thetrailboss]

sure its related via EB 5 and Stenger but unless you are telling me these projects are being sold to investors as a package, then no they are not. The fundraising for all of these projects is siloed (i.e. an investor knows where his money is going- it doesnt go to Stenger to then distribute to his projects as he pleases). Tell me if I misunderstand how Stenger and Quiros are marketing the NEK initiative.

So in line with that, Burke could successfully woo investors for a hotel, while the project in Newport never gets off the ground. True or false?
Trust me, I want this project to succeed, but the difference between building a hotel at burke, a basic amenity for a ski mountain that already has a wholly developed infrastructure, and the Newport projects, is vast. I never saw any of the Burke projects beyond the hotel happening, and definitely never thought this Newport thing would work.

They are all being jointly marketed as one big project with Stenger and Quiros being the consistent factor. That's fairly obvious and has been all along right from the "Press Conference Tour" in the Fall of 2012. Sure they are siloed, but any investor is going to Google Stenger or read about the other projects and see what's happening.

 

[Big Wave Dave]

intersting read here from march in the WSJ.

http://online.wsj.com/news/articles/SB10001424127887324445904578285863761735122

Trailboss- without even attempting to think I understand EB-5, seems like the job creation takes into account jobs saved as well as ripple effect jobs- would think with Burkes history "jobs saved" is proveable (hotel is needed to make the ski area viable), and the ripple effect jobs + people working on the hotel itself should make the number. But I would love to know what Stengers economist (assuming he has one if the Trapp lodge does) says on this- how can we get a copy of the actual Burke pitch to investors? anyone?

 

[Big Wave Dave]

I think that my initial optimism in 2012 was based on a presumption that with Bill talking about these big projects that he at least had SOME investors lined up and that they had SOME money. But it sounds like they went out, did a HUGE PR tour when they had $0 and anticipated that they would have no problem getting the investors. Now, with everyone and their grandfather trying the EB-5 approach for capital, and in perhaps more profitable sectors, and a decreasing number of available investors, it sounds like they are having a harder time than thought getting the money.

dont disagree but not sure its fair to say they had no money- $300mm into Jay is a heck of a pile of other peoples money.

 

[thetrailboss]

dont disagree but not sure its fair to say they had no money- $300mm into Jay is a heck of a pile of other peoples money.

But did they have any money for the other projects? That's the question.

 

[thetrailboss]

intersting read here from march in the WSJ.

http://online.wsj.com/news/articles/SB10001424127887324445904578285863761735122

Trailboss- without even attempting to think I understand EB-5, seems like the job creation takes into account jobs saved as well as ripple effect jobs- would think with Burkes history "jobs saved" is proveable (hotel is needed to make the ski area viable), and the ripple effect jobs + people working on the hotel itself should make the number. But I would love to know what Stengers economist (assuming he has one if the Trapp lodge does) says on this- how can we get a copy of the actual Burke pitch to investors? anyone?

That seems to be the issue (and I can't see the whole article).

 

[VTKilarney]

The fundraising for all of these projects is siloed (i.e. an investor knows where his money is going- it doesnt go to Stenger to then distribute to his projects as he pleases).

You are correct. Each project has its own funders, and stands on its own. But this does not mean that news about one project is irrelevant to another. If Gamma Trucking posts a big loss because it is harder to find affordable fuel, would you not be braced for Beta Trucking to report a loss? We are talking about market factors that apply to each project. You are correct, though, that investors may be more skittish of one project over another. But the reality is that Stenger hasn't been able to get ANYTHING off of the ground so far this summer.

We have a couple of things at work that impact Stenger's projects:
1) It is now known that Stenger is not coming close to meeting his promise on payback of capital. Phase 1 investors were promised 5 years. They will only get 40% back after 14 years, and are promised a massive balloon payment of 60% of their capital in year 15. Any bets on the likelihood of that balloon payment being made in full?
2) There is a massive amount of competition for EB-5 funds. It is now a buyer's market, and those buyers expect to see a return on their investment. They are no longer willing to lose the money just for a green card. Times have changed.
3) Some of the NEK projects may indeed be contingent on others. It is certainly possible that Renaissance Block investors will only allow the project to be built if the waterfront hotel is built too. These projects enhance each other, and an investor may put rules upon their investment for that reason.
4) While Burke needs a hotel, there is no confidence at all in its management team. That in and of itself makes the hotel project a tough sell.
5) Stenger isn't being forthright. He is clearly whitewashing the situation - but it's not working. Everyone can see through it. Investors may be spooked by that type of leadership.
6) Stenger has pissed off at least one very important person - Tony Pomerleau. Tony still throws a lot of weight around up in the Kingdom. He is a much better ally than enemy.

 

[thetrailboss]

You are correct. Each project has its own funders, and stands on its own. But this does not mean that news about one project is irrelevant to another. If Gamma Trucking posts a big loss because it is harder to find affordable fuel, would you not be braced for Beta Trucking to report a loss? We are talking about market factors that apply to each project. You are correct, though, that investors may be more skittish of one project over another. But the reality is that Stenger hasn't been able to get ANYTHING off of the ground so far this summer.

They are even more closely related than that with essentially common leadership (Stenger and Quiros).

And agree again that something is really wrong if Tony Pomerleau is calling BS.

 

[Big Wave Dave]

Vt Kilarney- great stuff. totally agree on several points- the first point you make is to me the most critical. And Bill is watching years and years of good will evaporate here, sad to see but its true.
But I again think that Burke stands on its own, separate from these. If I was an investor being pitched, I would see that Ary Quiros Sr. has thrown way more strikes than balls as a businessman, and I would look at the occupancy rates at Jay, which are through the roof, and think these guys know how to build/manage a ski area (or heck a waterpark!). But i respectfully disagree on your choice of analogy regarding how a commodity price effects different, similary situated business's- I dont see it applying in this instance. The economics of Burke as an existing historical entity and a recent beneficiary of significant capital improvements, as well as it being the centerpiece of a viable 3 season tourist area with KT's growth, paint a far different picture than re-building Newport, which is essentially an economic wasteland, and has been for years. They are not appies to apples outside of the management team.

 

[thetrailboss]

Vt Kilarney- great stuff. totally agree on several points- the first point you make is to me the most critical. And Bill is watching years and years of good will evaporate here, sad to see but its true.
But I again think that Burke stands on its own, separate from these. If I was an investor being pitched, I would see that Ary Quiros Sr. has thrown way more strikes than balls as a businessman, and I would look at the occupancy rates at Jay, which are through the roof, and think these guys know how to build/manage a ski area (or heck a waterpark!). But i respectfully disagree on your choice of analogy regarding how a commodity price effects different, similary situated business's- I dont see it applying in this instance. The economics of Burke as an existing historical entity and a recent beneficiary of significant capital improvements, as well as it being the centerpiece of a viable 3 season tourist area with KT's growth, paint a far different picture than re-building Newport, which is essentially an economic wasteland, and has been for years. They are not appies to apples outside of the management team.

You need to review what Stenger and Company are saying. They are not marketing these as separate projects but as a single effort to "Rebuild the Kingdom". After all it is called the Northeast Kingdom Economic Development Initiative.

 

[Big Wave Dave]

But did they have any money for the other projects? That's the question.

i dont think anyone thought, or expected, that the projects in 2012 had any funding. They clearly werent going to be funded before the initiative was announced? that is not to discount what are clearly diminished expectations, slapped by the real world they done got.

 

[Big Wave Dave]

You need to review what Stenger and Company are saying. They are not marketing these as separate projects but as a single effort to "Rebuild the Kingdom". After all it is called the Northeast Kingdom Economic Development Initiative.

and, if you read that article- "But each project within the initiative is distinct and must pass its own EB-5 vetting process, he said. As such, each project also must meet a distinct job creation target".

not trying to cause fights here. But these projects, whether they are/were flying under the same flag, are all separate and distinct. I would bet my lunch money that the actual investor pitches are not done on the macro level, how could they be if the actual investments are not allocated like that? So I dont think your point holds. These are not links in a chain.

 

[thetrailboss]

and, if you read that article- "But each project within the initiative is distinct and must pass its own EB-5 vetting process, he said. As such, each project also must meet a distinct job creation target".

not trying to cause fights here. But these projects, whether they are/were flying under the same flag, are all separate and distinct. I would bet my lunch money that the actual investor pitches are not done on the macro level, how could they be if the actual investments are not allocated like that? So I dont think your point holds. These are not links in a chain.

I think it's funny that the fact that they are marketed as one initiative smacks you in the face and you still deny it. Go to Jay's website and read the information. Give them your Email address and you will see that they say:

Jay Peak owners Ariel Quiros and Bill Stenger announced a $600 million economic revitalization initiative designed to bring up to 10,000 jobs to Vermont’s Northeast Kingdom. Known as the Northeast Kingdom Economic Development Initiative, the enterprise encompasses five projects stretching between Jay Peak Resort, Newport and Burke Mountain Resort. It is believed to be the largest initiative of its kind in the history of Vermont.

That is what they are saying. That is what they are marketing to me, a prospective person reading the information. Of course they are technically separate entities but they are under Stenger and Quiro's common management and marketing. Each investor can choose what project in which they want to invest.

Now one thing that you said was that if you were going to invest in Burke you'd be encouraged to invest based on Jay's track record. Granted, on the EB-5 site they only tout Jay's projects as being the "success" stories, but you would not read up about Burke, a going entity? Well what about Burke's past two seasons? Would the (negative) coverage from the industry magazine, and in the press in general, on the name change make you wonder? Would the negative publicity regarding the KT debacle also concern you? And would the fact that there are other projects that Stenger is heading up are having problems?

I'm sorry that I am asking you specifically, but I do so because most of us are skeptical of what is happening with Burke and these other projects; my impressions was that you came in telling us that we were all crazy and that you knew better. :???:

 

[Big Wave Dave]

i am not denying how the project was described here in the US, not delusional. But- THERE IS NO ACTUAL MARKETING IN THE UNITED STATES. See my point? I did raise the question earlier- is this how they are being marketed to the actual investors? I dont know, but I am willing to bet these projects are not being sold on the ground in China, Malaysia, Vietnam, etc as a whole unit, because factually they are not. I dont understand what is so complex about that. An investor in burke is not an investor in Jay is not an investor in Newport. therefore, what is being presented for domestic consumption is somewhat irrelevant.

I would also point out that multiple pages of skepticism on this thread were wiped away by one post from Burke management on the hotel construction, so the sky is falling crowd here doesnt move me much. I have seen it all at Burke from Kitchel to Quiros and have skepticism aplenty, but as a fomer businessman, the idea that there is parity amongst these various projects on an economic basis is false, with their being distinct risk/reward calculations.Thus my statement that the newport hotel news doesnt belong on this thread, despite the clear management nexus.

I think regarding burkes negative "coverage" you are showing a bit of cocoon syndrome on your part. Burke had a better year this year compared to prior years financially, taking into account everything you cite, as well as having a horrible, awful early season snow year. In the investing world, increasing profitability is far more dispositive of future success than rear looking management errors, which you correctly cite as issues regardless. To me, that is grounds for optimism. You and I both know if it snows a bunch next winter, burke will sell alot of lift tickets, the Q's be damned. You can not prove any causality between the widely known missteps of the Q's and the financial bottom line at burke. They are not correlated based on current evidence. My understanding is also that multiple condo properties were sold at Burke over the winter that had been listed for awhile, so it does not appear investors are that concerned about the Q's ownership either.

 

[thetrailboss]

i am not denying how the project was described here in the US, not delusional. But- THERE IS NO ACTUAL MARKETING IN THE UNITED STATES. See my point? I did raise the question earlier- is this how they are being marketed to the actual investors? I dont know, but I am willing to bet these projects are not being sold on the ground in China, Malaysia, Vietnam, etc as a whole unit, because factually they are not. I dont understand what is so complex about that. An investor in burke is not an investor in Jay is not an investor in Newport. therefore, what is being presented for domestic consumption is somewhat irrelevant.

Take a look at their website. And yes they do market in the U.S. because there is a cottage industry in the U.S. of immigration and business lawyers who do this work and connect foreign investors to projects.

Your point was that, basically, trouble with one project should not impact the others. I pointed out that this was a joint effort and you disputed.

I would also point out that multiple pages of skepticism on this thread were wiped away by one post from Burke management on the hotel construction, so the sky is falling crowd here doesnt move me much.

I think most of us are taking a "wait and see" approach. And yes you seem to not be skeptical of what is going on and I and others are wondering why.

I think regarding burkes negative "coverage" you are showing a bit of cocoon syndrome on your part. Burke had a better year this year compared to prior years financially, taking into account everything you cite, as well as having a horrible, awful early season snow year.

Really? How many articles have been in the media about them? I probably pay (too much) attention to anything Burke because it's where I grew up, but I think that a fair assessment of recent media attention could be classified as at least skeptical.

And second the mountain, from what published sources reported, had a terrible first half with 40% fewer skier days; they attributed that to weather and other factors. The year ended at the same, or pretty damn close to it, as is the history. This is not better than compared to the past few years.

And they have not reported on any revenue, at least not publicly. As a self-espoused former businessman you'd understand that a private venture would generally not report this information publicly. The only time I can recall recently was when Burke 2000 did was a general statement in 2001 that they ended in the black.

In the investing world, increasing profitability is far more dispositive of future success than rear looking management errors, which you correctly cite as issues regardless.

Where did you see any report of a profit?

To me, that is grounds for optimism. You and I both know if it snows a bunch next winter, burke will sell alot of lift tickets, the Q's be damned. You can not prove any causality between the widely known missteps of the Q's and the financial bottom line at burke.

Hold on there--again, WHERE are you seeing that they did better financially? We only know that skier days remained the same. And you would not be concerned about all the management decisions? Really?!

They are not correlated based on current evidence. My understanding is also that multiple condo properties were sold at Burke over the winter that had been listed for awhile, so it does not appear investors are that concerned about the Q's ownership either.

Multiple being two? Three? When were they sold? A lot of the criticism of Burke specifically came in December with the burning of bridges with KT and subsequent attention given to the name change and other things. I've heard from folks there of A LOT of problems--staff quitting midseason, snowmaking not being done right, some pretty unprofessional remarks made in the media, etc. I'd understand your point if units were flying off the shelves now, but it seems that there are a lot of questions that folks like me are asking and a lot of concerns.

 

[VTKilarney]

I would also point out that multiple pages of skepticism on this thread were wiped away by one post from Burke management on the hotel construction, so the sky is falling crowd here doesnt move me much.

I was very respectful of Andrew's willingness to step into the lion's den. Don't take my respectfulness as evidence of decreased skepticism. Just today I spoke with a very informed person about the odds of the hotel being built this summer. His/Her response: "No way."

Andrew stated the following: "Peak CM is the company that will build the hotel, and as they said in their release, they're ready to go. Nothing's really left to occur, construction will start soon; by 'green light' I just meant that once the snow's melted/ground thawed, everyone looking at the site and saying "Yes, it's time to drop a shovel in the ground."

Isn't it time to drop a shovel?

 

[Big Wave Dave]

Caledonian Record, April 10, 2014. Forgive me if I got the details wrong re. "profit". Revenue at burke was up 10%.
"Reviewing this year's ski season, Quiros said the snowfall was below average and was the third worst in the last eight years. Still he said the resort's skiing revenue improved 10 percent over last year, and 33 percent over two years ago. The number of skier visits were the same this year as last, but 25 percent more than two years ago. "We appreciate the support of everyone who visited us this year," he said."

well, ok, thats pretty much good news, right? Would you invest in a business with year over year growing revenue? I would.

Skier visits... We have been over this. Nobody ski's in new england when multiple rain storms are followed by temperatures consistently in the -30's. is this the Q's fault? No. To infer otherwise is silly. up 25% from 2 years ago? Guess people dont really care about the name, or KT, etc. How else does one see this? in the face of everything you state as a negative, revenue and skier visits are up. Good thing. Apologize if I am messing with the narrative on this thread.

The condo's have all traded since December, this can be verified on the local MLS.

And yes, I dispute the projects are all linked, because, outside of the managment nexus, they are not. Separate legal ventures. I understand what your saying abour management perception, but I think there are factors that balance this that are being ignored here.

And not sure why you care if I am skeptical. Of course I am. But wanna bet the hotel gets built? Like I said, I dont buy the rest of it. is that not skeptical enough for you?

I skied almost 2 dozen days at burke this year. Not once did I feel impacted by managements decisions, staff leaving, anything. Burke was Burke this year. Others may have had different experiences, and I am sorry for that. But I have been skiing at Burke for almost 40 years, and let me tell you, not much has changed. Except for that damn Q

 

[VTKilarney]

I agree that the skiing experience was not really impacted by management with the exception of the snowmaking debacle early on.