Lenders foreclose on Intrawest - Globe and Mail news
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Patrick
Well-known member
Admin":2d6wghlh said:
Thanks Admin. Yeah heard the same denials on the news as I was driving up to the hill, however they were other indication that it's might also be true. There is also the question that Intrawest might declared bankruptcy protection and would redeal their debt with their creditors.
Patrick
Well-known member
Among the big ski conglomerates, which is the best run, and how is its business model substantially different from Intrawest's? We all learned the (obvious) lessons of ASC, but what has Intrawest done that caused it to tank while a giant like Vail Resorts seems to steamroll forward... or am I misinformed about how well they're doing?
jamesdeluxe":q5900zg9 said:
The problem with Intrawest is the $1.8 billion loan Fortress took in 2006 to acquire the company. Like ASC was, Intrawest is heavily invested in real estate development. When that market tanked last year, well...it became awfully difficult to pay on that debt service. ASC was heavily leveraged as well, but to acquire other ski areas and to rapidly expand their existing ski areas (read: lots o' HSQs) and to build Grand Summit Hotels, etc. Fortress, on the other hand, took on the huge debt simply to acquire Intrawest. They of course have other debt service tied to development, but it pales in comparison to the purchase loan.
Geoff
New member
jamesdeluxe":39r77v82 said:
I'm not aware of any big ski conglomerates. All the corporations that I know of that own & operate ski resorts pretty much only do that. Of the corporations that specialize in owning and/or operating ski resorts, it's tough to tell since most are privately held. I suspect the Boyne model where they are paired with a Florida REIT that actually owns the property is the most stable business model. Intrawest, like ASC, had far too much debt financing and it eventually killed them.
berkshireskier
Active member
Seems to be the classic case of overleveraged real estate development - borrow a lot of money to build something (or buy the company in this case) and then hope you have the cash flow to pay back the debt. Sad to see, but people never seem to learn their lesson.
berkshireskier
Active member
True, not every real estate development project goes broke (obviously), but timing the real estate cycle correctly and managing the debt load intelligently seems to be the key to succeeding or not succeeding in that business. I have lived through several of these "boom and bust" real estate cycles and have seen many real estate developers and banks go bust when they get stuck with overleveraged properties that cannot be sold in a timely manner and at a price that allows the loans to be paid back. I guess this is always the risk the bank and the real estate developer take when undertaking any real estate development project (or doing a leveraged buyout of a company, such as the case with Intrawest). I always joke that the invention of the electronic spreadsheet (remember Lotus 123??) exacerbated the problem because it allowed investors to put together sophisticated looking pro forma spreadsheets that, of course, always showed rosy and impressive looking cash flows well into the future and the bankers believed them.
EMSC
Well-known member
berkshireskier":23cwjyxg said:
The invention of the spreadsheet was actually a program called VisiCalc. Designed specifically for investment houses on Wall Street as I recall. The guy who invented never patented or protected any of it in any way. Last I heard he was a professor at a university.
Anyway, the whole derivatives market and the slicing and dicing of mortgages into supposedly safe layers and all that was entirely based on mathematical modeling done in spreadsheets. Amazing how real life intrudes on perfectly built excel models.
Marc_C
Active member
EMSC":22xyx70v said:
At the time, there was no such thing as a patent for computer software.
http://en.wikipedia.org/wiki/Dan_Bricklin
http://en.wikipedia.org/wiki/VisiCalc
soulskier
New member
rfarren":y664wuan said:
But VR needs to diversify. They're heavily invested in one region of the country: Colorado (Heavenly being the only exception). They're the only large ski area holding company left in North America that is so. A bad winter in Colorado and they take it on the chin. Thus properties like Stratton and Tremblant should look very attractive.
And FWIW, Mountain Creek does an enormous number of skier visits.
Patrick
Well-known member
Admin":4kdkkuz8 said:
Totally agree with Admin on this. One of the problems with ASC was that they mostly owned a good part of the big players in one region and little elsewhere.
Tremblant isn't not my type of mountain, but it's far from a "crappy holding".
My guess is that ownership of Tremblant will eventually be from Quebec. Not by one player, but by a group, because I don't think anyone in Quebec and Canada is strong enough to buy Tremblant on their own. Price tag would be very high.