CNL RESORT SALE: READING THE TEA LEAVES
It’s the largest ski area sale that hasn’t quite happened, and might never happen. But whatever manifests with the 15 resorts owned by CNL Lifestyle Properties will impact the winter resort business in general.

Speculation kicked off in March, when the Associated Press filed a story headlined, “16 Ski Resorts Worth Hundreds of Millions Could Be Sold.” Of course, as a Real Estate Investment Trust (REIT), CNL had a set lifespan, one that is due to end in the next year or two. It’s been no secret that the REIT would be divesting the resorts in the near future.

Selling the portfolio—which includes resorts from Stevens Pass, Wash., to Bretton Woods, N.H.—as a whole is CNL’s first and preferred option, but not its only option. It could also merge all of the assets with another company, list the portfolio as a public offering on the national stock exchange, or extend the life of the REIT. How it will play out remains unclear. The only thing that is certain is that one of the options will be decided on by Dec. 31, 2015.

CNL has already sold some of its assets, including 48 golf properties sold last summer for $320 million, and its senior housing properties, sold for $790 million in December. The firm has been courting would-be buyers of its ski areas—well-capitalized firms with an established interest in tourism and recreation—for the past year or so. But that’s a small pool.

CNL’s latest earnings report, released at the end of March, indicates that business at its resorts has been steady, that “rent coverage” is 1.4 times the resorts’ EBITDA, and that all resorts are current on payments. Yet over the past year, CNL’s share valuation fell 24 percent, to $5.20 a share, down from $6.85 in 2013, and from $10 per share a when it first entered the industry. In a letter to its shareholders, CNL specified “our ski and mountain lifestyle and attractions assets have been perceived as less valuable by market participants…”

Some analysts suggest that CNL may have paid a premium for its ski areas. It bought into the industry starting in 2005, amid a string of four record-breaking seasons. Since then, and especially in the past few years, resorts have been selling for a lower multiple than they were a decade ago, said one analyst.

One benefit of its ownership, CNL has said, is its ability to fund capital projects. During its tenure, CNL invested more than $300 million in its resorts. Half of the money went toward maintaining existing assets, while the rest was used to expand in the form of new lifts, base lodges, and snowmaking infrastructure. Another valuable piece of its legacy: The resort’s leases with CNL require that 4 to 6 percent of the areas’ top-line revenue be reinvested in the form of capital maintenance, and those terms carry over if and when the areas are sold.

How will the market value all of this? That question will remain unclear until the ownership question is settled. And even then, there will surely be conjecture as to whether the buyer got a good deal.


WOLF CREEK: COLORADO’S NEXT SKI TOWN?
About 14,400 inches of snow have fallen at Wolf Creek Ski Area since the first grumblings about billionaire B.J. “Red” McCombs’ plans to develop the Village at Wolf Creek, and it appears more will fall before the issue is finally settled.

In April, the Rio Grande National Forest said it was standing by its November 2014 decision to allow the long-proposed (and opposed) land swap that would provide an access road to McCombs’ proposed ski village. The decision came despite continued objections from environmental groups concerned with the impact on the local Canada lynx population and other wildlife.

Under the land swap, McCombs gets 204 acres of forest land connecting the village to U.S. Highway 160. In exchange, the Forest Service would get 178 acres of wetlands on the Continental Divide in the Rio Grande National Forest and $70,000.

But about a week after the Forest Service decision was released, the San Juan Citizens Alliance, Rocky Mountain Wild, and the San Luis Valley Ecosystem Council filed two federal lawsuits seeking records related to the land swap. The groups claim the environmental impact statement supporting the Forest Service’s decision is incomplete.

The Forest Service says the riparian areas that it would gain through the land exchange would be protected under the its management plan, while the Clean Water Act protects similar areas on private property.

If built as currently planned, the Village at Wolf Creek would feature up to 1,711 housing units, including 821 condominiums, 522 townhouses, 138 single-family lots and several hotels. However, the Forest Service’s latest decision, even if it stands, only authorizes the land exchange, not the development. McCombs must still get a planned unit development application approved by Mineral County. That probably allows time for another 400 to 800 inches of snow to fall before the situation is settled.


WE THOUGHT ALL THINGS VAIL WERE “EPIC”
The Yarrow in Park City, Utah, has long been a favorite among skiers and riders, but future Tweets about their nice stays at the property will require an additional 37 characters. Now that Vail Resorts is managing and operating the 181-room hotel, it has morphed the brand name to “DoubleTree by Hilton Hotel Park City/The Yarrow.”

The purchase follows VR’s pattern of snapping up hotels and other properties at or near its ski areas. VR also manages a DoubleTree in Breckenridge, Colo., and more than 150 retail stores across the Western states. If you were thinking of running a business in one of VR’s resort towns, we suggest you consider sign making.


WAIVERS OUT, OREGON TURNS TO SAFETY LAW
After the Oregon Supreme Court invalidated recreational release waivers, at least as currently used, the state’s resorts have been seeking to restore some of the lost protection by amending the Oregon Skiing Activities Act to broaden the range of risks that skiers and riders must assume.

In a precedent-setting waiver case, Bagley v. Mt. Bachelor, the state Supreme Court ruled that Mt. Bachelor exercised superior bargaining power by requiring releases from season pass holders on a take-it-or-leave it basis. The “plaintiff had no meaningful alternative to defendant’s take-it-or-leave-it terms if he wanted to participate in downhill snowboarding,” the Court wrote.

As a result of this decision, Oregon ski areas were stripped of the protections afforded by release agreements. That loss was compounded by an antiquated 1979 ski statute that has never been updated.

To restore some of the lost protection, the Oregon legislature is considering changes to the ski safety statute. One draft, favored by resorts, would: permit release agreements; expand the current definition of inherent risks of skiing to include freestyle terrain (including terrain parks), snow immersion, and snow movement; bar suits for injuries due to the inherent risks of skiing; put the sole responsibility for collisions on the overtaking skier; declare that ski areas have no duty to judge a skier’s skills, including a skier’s ability to use a lift; require skiers to inspect freestyle terrain before use; and add other skier duties.

Oregon plaintiffs’ lawyers oppose some of these clauses, and the legislature has instructed both sides to find language acceptable. At press time, one participant said “encouraging progress” was being made. Resorts hope a bill can be passed in the coming months and be in force for the 2015-16 season.


SHORTSWINGS
Squaw Valley has finally come to terms with local Troy Caldwell to build a gondola linking Squaw and neighbor Alpine Meadows. Caldwell had long planned to link the areas himself via his White Wolf area. There’s no timetable for the lift, as Squaw hasn’t obtained permits yet. ... This past March, a Polish skier on holiday at Avoriaz, France, was struck by an airplane as it made a forced landing on the slope. The plane, equipped with skis for on-snow landings, narrowly missed striking a lift as well as a group of children. The Polish skier’s hand was nearly amputated in the accident.