When CNL Lifestyle Properties announced it was putting its entire portfolio of mountain properties — including 15 ski resorts, a sightseeing tram and multiple ski area villages — up for sale, it was heralded as potentially being the largest ever ski industry transaction if they went to the same buyer. But the exit strategy that was supposed to be in place by the end of 2015 never materialized, and instead, CNL announced it would update investors some time during the first quarter of 2016 about what its plans are now.
So with the self-imposed deadline having come and gone, Curbed Ski decided to investigate what is standing between these resorts and new owners.
The first problem are the long-term operating leases in place at CNL’s resorts. CNL Lifestyle Properties is a real estate trust; it makes money off rents from the operators of its properties. So when CNL was buying resorts, it either leased them right back to the operators that sold them or found someone else to come in and run the ski area. In many cases, those leases have years, even decades, left. That presents a challenge to any resort operators that would like to buy the property: they’d either have to wait out the lease, which could be decades, or negotiate terminating the lease, an expensive proposition if even possible.
That leaves other real estate investment firms or the current operators as potential buyers. The next comparable real estate trust with ski holdings owns much smaller, metro ski areas — not on the same scale as CNL’s marquee resorts like Crested Butte, Sunday River, and Sugarloaf.
CNL's ski resorts and their current operators:
- Brighton Ski Resort - Boyne Resorts
- Crested Butte Mountain Resort - The Mueller family
- Cypress Mountain West - Boyne Resorts
- Jiminy Peak Mountain Resort - Brian Fairbank
- Loon Mountain Resort - Boyne Resorts
- Mount Sunapee Mountain Resort - The Mueller family
- Mountain High Resort - Mountain High Resort (Karl Kapuscinski)
- Northstar-at-Tahoe Resort - Vail Resorts
- Okemo Mountain Resort - The Mueller family
- Sierra-at-Tahoe Resort - Booth Creek
- Stevens Pass - Stevens Pass Mountain Resort (Karl Kapuscinski)
- Sugarloaf Mountain Resort - Boyne Resorts
- Summit-at-Snoqualmie Resort - Boyne Resorts
- Sunday River Resort - Boyne Resorts
Most of the current operators, hypothetically, look like good fits to own the resorts as well as run them. The one resort CNL has sold thus far, Bretton Woods in New Hampshire, was acquired by Omni Hotels & Resorts, which had been running the historic hotel at the ski area’s base. In that case, Omni got the historic hotel, a golf course, inns, developable land and the ski area while CNL got more than the carrying value — the amount CNL currently values the property on its books. CNL’s remaining 14 ski resorts are run by six different operators, but whether similar deals can be struck that meet CNL’s price requirements but are affordable for the operators is a big unknown.
The company with the biggest stake in CNL’s exit strategy is Boyne Resorts. Boyne operates seven mountain properties that CNL is trying to sell. That includes popular, well-trafficked resorts like Sunday River and smaller attractions like the Gatlinburg Sky Lift, a sightseeing tram in Tennessee. Altogether, CNL-owned resorts account for the lion share of Boyne’s ski operations outside of its home state of Michigan. When CNL announced its plans to sell off the mountain properties, Steve Kircher, president of eastern operations for Boyne, called it a "nonevent," maintaining that guests wouldn’t even notice a change in ownership. The company did not immediately respond to a recent request for comment about the status of its resort operations or whether it had any interest in acquiring the ski areas.
Boyne operates seven mountain properties that CNL is trying to sell. That includes popular, well-trafficked resorts like Sunday River and smaller attractions like the Gatlinburg Sky Lift, a sightseeing tram in Tennessee.
Among the most notable properties that CNL owns is Crested Butte Mountain Resort, which it bought from the Mueller family along with Okemo Mountain Resort and Mount Sunapee Mountain Resort. In 2013, there was talk that the Mueller family was going to sell its Crested Butte operational lease to an undisclosed buyer — rumored to be Intrawest partnering with a private equity group — but it never went through. In an email to Curbed Ski, Erica Mueller, Crested Butte Mountain Resort’s director of innovations and relations, wrote that the family is not actively trying to sell its operational lease.
Mueller wrote that CNL selling Crested Butte would not affect the family’s plans. "We hold a long term lease that would not be affected with any sale that may occur, nor would it impact the operations of our three ski areas," she wrote. "Most importantly, any change of ownership of the assets would not be seen or felt by our employees or our guests." Asked about whether there had been any discussion about buying the mountain back, Mueller wrote that while they stay in regular contact with CNL, they can’t comment on who the company might be talking about a potential sale.
Other than Vail Resorts and Northstar, which seem like a natural fit if the ski industry giant can afford another acquisition after spending $100 million in improvements last year and $136 million on Perisher in Australia, the remaining lease holders are smaller companies only operating a few resorts. Vail Resorts declined to comment for this story.
When the rumor of a potential new operator for Crested Butte was making its way through the town, the general feeling of the community in news reports was one of excitement. New owners or operators typically means another round of investment — a cash infusion with the potential to draw more visitors, resulting in more business for everyone in the tourism and real estate economy. A lot of the resorts purchased by CNL did get new amenities and upgrades, but that might have been years ago now, with plenty of new capital investment across ski country in the meantime.
The hurdles of long-term leases, the need to deliver a certain return to investors and a seeming dearth of buyers able to meet those requirements could drag out the uncertainty of CNL’s exit strategy.
At least in the case of Crested Butte, the emergence of summer tourism as a revenue driver has made the community less obsessed with the ski area, according to Jeff Hermanson, a real estate investor and restaurateur who owns Larimer Square in Denver and moved to Crested Butte 42 years ago. The town is still interested in what goes on at the mountain, but bike trails and other summer activities are big business now.
CNL doesn't have any upcoming announcements scheduled, according to a spokesperson for the company, but an update could come with its next SEC filing in March. In a statement provided to Curbed Ski, CNL writes that it "continues to evaluate strategic options for the remainder of its ski and mountain properties as it seeks to provide liquidity to its shareholders."
The hurdles of long-term leases, the need to deliver a certain return to investors and a seeming dearth of buyers able to meet those requirements could drag out the uncertainty of CNL’s exit strategy. Or there may never be a new buyer at all. CNL could choose to take a group of resorts public to try and recoup its investment, creating a whole new company.
"The other possibility is that someone will unravel the puzzle," Hermanson said about Crested Butte’s particular situation. "It is a puzzle." But someone creative and with the resources could find a transaction that was satisfactory to CNL and the Mueller family, he said. Just who that could be remains to be seen.