FOR SALE: Crested Butte CO, Northstar CA, Brighton UT, Sunday River ME & 12 More Ski

[SIKSKIER]

FOR SALE: Crested Butte CO, Northstar CA, Brighton UT, Sunday River ME & 12 More Ski

Is this new or have I missed this news?
http://snowbrains.com/for-sale-cres...ghton-ut-sunday-river-me-12-more-ski-resorts/

 

[mriceyman]

Is this new or have I missed this news?
http://snowbrains.com/for-sale-cres...ghton-ut-sunday-river-me-12-more-ski-resorts/

Ya its been out their for awhile.. I would own them but im short a couple hundred mil


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[Vortex]

No mentioned in there is Boyne has the ability to manage some of those properties even if CNL sells them. Not real new. CNl is and has been divesting from other sectors as well.

 

[thetrailboss]

Yeah, CNL is essentially a landlord for all of these places with leases with Boyne and others. I heard something a while back about them thinking of dumping these properties and getting out of the REIT business. I doubt that Vail would buy it. It will be an investment group or something similar.

 

[goldenboy80]

Yes, I think the sale process began in March 2015 so the amount of time it has taken to canvas potential buyers and have them perform due diligence is still reasonable. If a highly interested buyer emerged at the beginning, the process could be shorter than a year but this doesn't appear to be the case. I believe CNL is a motivated seller given the wind-down of the REIT. At this point, I imagine they're in later stages of the bidding and/or negotiation process. Jefferies probably wants to close the deal before year end so the bankers working on it can get bonused on the fees from the transaction, though it may wind up closing next year. I am praying that Sugarloaf doesn't get another deadbeat Dad like CNL. Since Sugarloaf was acquired by CNL in 2007, there have been no high speed quad installations, the oldest lift system of a major resort in New England got older, and there were two major lift accidents. Thanks for the snowguns, CNL.

 

[BenedictGomez]

LOL @ CNL

Some financial adviser tried to get my Mom to dump money in their REIT products about 10 years ago, and I told her to avoid them like the plague!

 

[thetrailboss]

Yes, I think the sale process began in March 2015 so the amount of time it has taken to canvas potential buyers and have them perform due diligence is still reasonable. If a highly interested buyer emerged at the beginning, the process could be shorter than a year but this doesn't appear to be the case. I believe CNL is a motivated seller given the wind-down of the REIT. At this point, I imagine they're in later stages of the bidding and/or negotiation process. Jefferies probably wants to close the deal before year end so the bankers working on it can get bonused on the fees from the transaction, though it may wind up closing next year. I am praying that Sugarloaf doesn't get another deadbeat Dad like CNL. Since Sugarloaf was acquired by CNL in 2007, there have been no high speed quad installations, the oldest lift system of a major resort in New England got older, and there were two major lift accidents. Thanks for the snowguns, CNL.

Correct me if I'm wrong, but I think that Boyne is the one who is primarily responsible for the ski infrastructure. I imagine that there might be a split as to who pays for what, but Boyne did the snowmaking work.

 

[goldenboy80]

Correct me if I'm wrong, but I think that Boyne is the one who is primarily responsible for the ski infrastructure. I imagine that there might be a split as to who pays for what, but Boyne did the snowmaking work.

Contractually, Boyne takes 6% of total revenues, which is held in a maintenance capital expenditures reserve for basic projects around the mountain. This pool probably amounts to a few million and likely includes snowmaking work, which is costly but not excessive. For major projects such as a hotel renovation or a new lift, this would fall into a category called over-investment. For this type of project to move forward, Boyne must submit a proposal to CNL along with expected IRR. Boyne's lease payment is then upwardly adjusted to reflect the resort's enhanced asset value. This system is intended to balance the needs of growth and cash flow stability, but in my opinion, prevents the resort from living up to its full potential. It assumes that Boyne employees have the capability to effectively make the business case for a long-term, costly improvement. It also causes Boyne to be very cautious as higher lease payments could erase their own profitability given narrow margins in the industry. Compare this with the traditional combined owner/operator function where the owner has a long-term vision and decides to 'go for it' if they have the money and wants to do something. This was how Sugarloaf's gondola got built in the 1960's, though expensive at the time, was a great decision for Sugarloaf and put them on the map. I doubt that something like this could happen today the way things are structured. REITs have a low cost of capital but often a low threshold for risk. The CNL Lifestyle Properties REIT performed poorly which exacerbated the slowness of capital trickling to its slower growing properties.

 

[thetrailboss]

Contractually, Boyne takes 6% of total revenues, which is held in a maintenance capital expenditures reserve for basic projects around the mountain. This pool probably amounts to a few million and likely includes snowmaking work, which is costly but not excessive. For major projects such as a hotel renovation or a new lift, this would fall into a category called over-investment. For this type of project to move forward, Boyne must submit a proposal to CNL along with expected IRR. Boyne's lease payment is then upwardly adjusted to reflect the resort's enhanced asset value. This system is intended to balance the needs of growth and cash flow stability, but in my opinion, prevents the resort from living up to its full potential. It assumes that Boyne employees have the capability to effectively make the business case for a long-term, costly improvement. It also causes Boyne to be very cautious as higher lease payments could erase their own profitability given narrow margins in the industry. Compare this with the traditional combined owner/operator function where the owner has a long-term vision and decides to 'go for it' if they have the money and wants to do something. This was how Sugarloaf's gondola got built in the 1960's, though expensive at the time, was a great decision for Sugarloaf and put them on the map. I doubt that something like this could happen today the way things are structured. REITs have a low cost of capital but often a low threshold for risk. The CNL Lifestyle Properties REIT performed poorly which exacerbated the slowness of capital trickling to its slower growing properties.

Wow, great info there. Thanks for sharing that. Hearing this now makes me realize that the reason for the two lift failures was more due to CNL and not Boyne.

 

[AdironRider]

Wow, great info there. Thanks for sharing that. Hearing this now makes me realize that the reason for the two lift failures was more due to CNL and not Boyne.

Anyone who has signed a commercial lease would know that the responsibility still primarily falls on Boyne, and not CNL. You see them in the form of triple net leases and cam fees (its structured differently for ski areas as outlined above, but the premise is still the same). Very rarely does a commercial landlord have to pay for improvements to the property, or even the taxes associated with ownership.

Boyne balked at a higher lease rate, despite the notion that they would have a better product. It burned them.

 

[goldenboy80]

Wow, great info there. Thanks for sharing that. Hearing this now makes me realize that the reason for the two lift failures was more due to CNL and not Boyne.

I think that's right. If you looked at the Sugarloaf 2020 website a few years ago, Boyne had identified King Pine and Spillway as two lifts that needed to be replaced and part of the long-term improvement plan. But they weren't replaced, then they failed. In fact no new lifts were installed by CNL until they had no choice. Meanwhile, Boyne has done a nice job with their maintenance projects, painting the village, improving signage, increasing snowmaking efficiency, and cutting glades-- all part of their maintenance carve out and/or operating budget for the most part. I don't think CNL realized how important proactive lift replacement is when you're faced with harsh New England weather and outdated lift tech. They probably figured the next owner would do it once the 10-year REIT matured and ownership was transferred. A day late and a dollar short.

 

[goldenboy80]

Anyone who has signed a commercial lease would know that the responsibility still primarily falls on Boyne, and not CNL. You see them in the form of triple net leases and cam fees (its structured differently for ski areas as outlined above, but the premise is still the same). Very rarely does a commercial landlord have to pay for improvements to the property, or even the taxes associated with ownership.

Boyne balked at a higher lease rate, despite the notion that they would have a better product. It burned them.

You're right in that there is a certain element of shared responsibility, particularly when you've got Boyne monitoring the lift system on a day-to-day basis. But I think part of it comes down to the owner/operator structure itself. Certain projects are highly marketable with the potential to improve revenues. Replacing not particularly sexy infrastructure such as an old fixed grip terminal with a new fixed grip terminal is still costly and could reduce profitability in the short-term even if it's the right thing to do. In hindsight, obviously these projects would have been done sooner as no one profited when the lifts went temporarily out-of-service mid season, not to mention risk to reputation. On the balance sheet I think reputation could be chalked up to goodwill or other intangible assets.

 

[AdironRider]

Any risk manager would tell you it would be bad business to have a lift fail. Boyne rolled the dice and came up short because of the reasoning you mention above. They let short term thinking cost them long term business, as now the skiing public thinks they are damaged goods. In hindsight, I bet they regret not springing for the 20 year amortized rate increase of the lift on their lease. I think we all agree that lift failure cost them more than a couple hundred k in lost revenue. They probably lost the difference in the lease payment the day of the lift failure alone.

 

[goldenboy80]

Exactly... and I think both parties learned their lesson based upon what I've observed. That's why I am confident that the Double Runner lift will be proactively replaced sooner rather than later. It's 42 years old and ridden by a lot of children. Based on recent experience, odds are good they'll put in another Doppelmayr Tristar terminal to replace the old Borvig equipment in place. Even if it's technically functioning fine why take the risk.

 

[AdironRider]

CNL didn't learn anything, they will get paid regardless. Boyne sure learned not to let a nickel hold up a dollar though.

 

[goldenboy80]

Haha, cynical I like it!

 

[SkiFanE]

We bought at SR (not on mountain) 11 years ago, during end of ASC days. Pass prices were so attractive! I think they're up $3-400 since then. But Noyne has really brought the place up a couple notches and really uses the mountain. I'm not a fan of the Chondola and ride it about 1x/year - but for non-ski stuff and downhill mt biking it's been key. The place has been spruced up. There is so much more "life" around the mountain. They turned Fall Fest into an awesome weekend - our first one in 2004 was deadsville. I don't pay much attention to snowmaking, but I know that's been a big investment. it makes sense to use what they have Year-round, I've think they've done a great job.

 

[thetrailboss]

We bought at SR (not on mountain) 11 years ago, during end of ASC days. Pass prices were so attractive! I think they're up $3-400 since then. But Noyne has really brought the place up a couple notches and really uses the mountain. I'm not a fan of the Chondola and ride it about 1x/year - but for non-ski stuff and downhill mt biking it's been key. The place has been spruced up. There is so much more "life" around the mountain. They turned Fall Fest into an awesome weekend - our first one in 2004 was deadsville. I don't pay much attention to snowmaking, but I know that's been a big investment. it makes sense to use what they have Year-round, I've think they've done a great job.

Sunday River has been a big winner. I think Bob R can attest to how far it has come....and even back in 2004 or so it wasn't THAT bad. It just needed some renovations and some new capital.

 

[SkiFanE]

That's why we bought there - loved it back then. And I'm a simple person - MRG is probably the mountain that best meets my style - I like natural and am fine with simple things - I just love to ski and nice lodges and amenities don't really matter to me. But there is a certain level of maintenance and upkeep that seemed to be lacking before Boyne. Was it worth 3-400/year extra? Not sure.... But ASC pricing wasn't sustainable I don't think. Still a good deal considering the long season allows me to get 50-60 days on the pass

Sunday River has been a big winner. I think Bob R can attest to how far it has come....and even back in 2004 or so it wasn't THAT bad. It just needed some renovations and some new capital.

 

[Smellytele]

That's why we bought there - loved it back then. And I'm a simple person - MRG is probably the mountain that best meets my style - I like natural and am fine with simple things - I just love to ski and nice lodges and amenities don't really matter to me. But there is a certain level of maintenance and upkeep that seemed to be lacking before Boyne. Was it worth 3-400/year extra? Not sure.... But ASC pricing wasn't sustainable I don't think. Still a good deal considering the long season allows me to get 50-60 days on the pass

When I skied there a lot back in the 90's when they were building out all the different peaks I really enjoyed it. It seemed there was a new pod or at least glade every year. Then in the early 2's after not skiing there for a few years we brought some friends there and I thought the product had seriously declined. Snow making and quality of the skiing had taken a serious hit. Went again early season last year and enjoyed it but was more crowded than I had remembered and there had been no upgrades of anything that I could see besides a few carpet loaders and the chondola. Same old lodges and lifts.