The Crested Butte ski resort, along with 13 other ski resorts, has sold to a hedge fund. See Denver Post article here.
I am a little troubled by the comparison of the sale to a mortgage being sold to another mortgage servicer. In the case of a mortgage, the debt holder gets verification of insurance: in case of trouble, the insurance will cover major issues thus rendering the deal hedged. In this case, there has to be some insurance, likely in the form of a lease cancellation clause. If the resort managers, (i.e. the Mueller family) fails to manage properly, the owners, (i.e.the Och-Ziff hedge fund) can terminate that relationship. Given what we have seen from the Muellers since they started managing CBMR, I would say that their ability to manage well is certainly hindered by a lack of attention, be it their presence or money being put towards improvements. They have had some substantial real estate misses here and with the latest lawsuit they lost related to the Prospect subdivision, I think their perceived ability to improve the ski area is certainly compromised. Hopefully the new owners will be able to exercise a termination clause and get better managers here. In the meantime, with local real estate all is well. I always consider us a great summer resort with skiing adding nothing to real estate valuations. If something were to happen on the mountain and it were to improve the skiing experience, it would only create upside to our market. Hopefully that will happen one day, but this deal potentially puts us a step closer.
I am a little troubled by the comparison of the sale to a mortgage being sold to another mortgage servicer. In the case of a mortgage, the debt holder gets verification of insurance: in case of trouble, the insurance will cover major issues thus rendering the deal hedged. In this case, there has to be some insurance, likely in the form of a lease cancellation clause. If the resort managers, (i.e. the Mueller family) fails to manage properly, the owners, (i.e.the Och-Ziff hedge fund) can terminate that relationship. Given what we have seen from the Muellers since they started managing CBMR, I would say that their ability to manage well is certainly hindered by a lack of attention, be it their presence or money being put towards improvements. They have had some substantial real estate misses here and with the latest lawsuit they lost related to the Prospect subdivision, I think their perceived ability to improve the ski area is certainly compromised. Hopefully the new owners will be able to exercise a termination clause and get better managers here. In the meantime, with local real estate all is well. I always consider us a great summer resort with skiing adding nothing to real estate valuations. If something were to happen on the mountain and it were to improve the skiing experience, it would only create upside to our market. Hopefully that will happen one day, but this deal potentially puts us a step closer.
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