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Jay Peak Going on the Market within a Few Weeks

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. No mention of Burke, I thought last spring they were going to bundle together, I hope someone is interested ???

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Yeah, Burke might do better with separate management seeking to fill a different niche than Jay. On paper they seem like 2 very different resorts but I have only been to Jay.

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5 hours ago, Brad J said:

. No mention of Burke, I thought last spring they were going to bundle together, I hope someone is interested ???

At some point this summer the receiver said Burke was a ways away from being able to be sold (whatever that means, assuming it means it makes such a negative profit that no one would ever buy it).

Not sure if it was directly announced then, but implication was that they'd be separate!

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22 hours ago, Weatherman said:
8 hours ago, Smellytele said:

heard Burke was going to subdivide some land off maybe for housing

My understanding that is Burke is not planned to go on the market until the receiver figures out how to turn a profit there.

I hear that the EB-5 situation is not satisfied yet , they need to find an way to produce new jobs , they are thinking a upgraded snowmaking system with pond.

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23 hours ago, Weatherman said:

My understanding that is Burke is not planned to go on the market until the receiver figures out how to turn a profit there.

Them and every other previous owner.

I was at Burke on Saturday. It was my second time there since they built the new lodge. Almost seemed like there were more BMA racers and staffers than GP at times. Nice that they upgraded the poma to a T-bar so the racers still have their own lift. I went into the new base lodge once to grab a snack and hit the head. Never more than half a dozen people milling about while I was in there.

Any ways, the mountain had really great conditions with most of their natural snow trails open and about three quarters of their glades open. Skied way better than I expected, I had a blast. And... the place was dead. On a Saturday, after one foot of new snow in the past week and the best conditions in three weeks.

Lower Willoughby, one of their three premier groomers and main routes (along with Warren's and Big Dipper) was closed as they still haven't completed snow making to make a solid base. The trail had mini-whales from a previous snow making effort but snow making operations do not appear to have restarted. Maybe they ran out of budget or decided to cut their loses? Doesn't make sense on one of their three primary groomer routes. 

The new lodge is baffling, I can't imagine that they fill their beds very often. They built two new base lodges and two high speed quads during the past dozen years... the place must have a ton of debt. I am sure there will be another sucker, I mean buyer. Somehow, that place keeps getting good money dumped in after bad.

Not that I am complaining. But I kept on shaking my head in disbelief on Saturday... so much investing and so little pay off in terms of increasing revenues. Again, not that I am complaining. There are a ton more people at Burke now compared to 2003 or so when I first skied it. But my impression is that it just doesn't look profitable nor sustainable.

At least all the stupid Q's are gone...

Edited by thesnowway

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Temperatures will be on the chillier side today and not making it much out of the teens.  That's great news however as snow making is fired back up and running on Lower Willoughby. 

On tonight's report... must have been warm there this weekend.

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The $100 million is in reference to the terms for payment to their financial consultant for the sale

 

In  exchange  for  Houlihan  Lokey’s  services,  the  Receiver  has  agreed  to  the following  fee  schedule:

(a) Houlihan  Lokey’s  fee  for  a  transaction  valued  up  to  $100,000,000  will  be the  greater  of  q%  of  the  transaction value  or  $1,000,000 minimum  fee, whichever  is  greater.  Id.

(b) If  the  value  of  the  transaction  exceeds  $100,000,000,  then  Houlihan Lokey’s  fee  for  the  first  $100,000,000  will  be  $1,500,000  plus  3%  of  the  transaction  value  above $100,000,000.  Id.      For  example,  if  the  ultimate  purchase  price  is  $150,000,000,  Houlihan  Lokey will  be  entitled to a  total  fee  of  $3 million (1.5%  of  the  first  $100  million plus  3% of  the  next  $50 million which equals a  total  percentage  of  2%). 

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^, I got that. I was just assuming 100mm as a price paid to drive the discussion around the economics.

 

I remember some numbers around 250-300mm as the amount the investors lost so a 30% recovery from this sale seems within the realm of possibility.

 

My question is, do the resort economics today support such an investment? Is there a cash flow yield of say 20% annually on the 100? Anyone know what that looks like?

 

 

 

 

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As mentioned above Stowe sold for 55 million without any of the current real estate projects.

Jay has the advantage of a northern and snowy location so they save a lot on snow making. Snow making is a huge cost so Jay is probably more efficient to operate than other ski area in Vermont.

They made 9 million in 2017, so 100 million might not be crazy.

https://vtdigger.org/2017/04/30/jay-peak-profits-rise-9-million-officials-report/

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10 hours ago, Benski said:

As mentioned above Stowe sold for 55 million without any of the current real estate projects.

Jay has the advantage of a northern and snowy location so they save a lot on snow making. Snow making is a huge cost so Jay is probably more efficient to operate than other ski area in Vermont.

They made 9 million in 2017, so 100 million might not be crazy.

https://vtdigger.org/2017/04/30/jay-peak-profits-rise-9-million-officials-report/

9% annual return. Yeah, that's not crazy at all.

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Again, comparing Stowe's sale for just the ski operation (no real estate) to Jay's pending sale (the whole enchilada) is like comparing apples and oranges.   You get an idea on the ops value but that's it.

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