Mid-Atlantic The Neverending Timberline, WV: Info, Weather, and Stoke

[Nate Tobik]

From a financial perspective the VR purchase does change a lot. For a PE group there is now a viable exit path.

Someone could buy this, invest $8-10m, sell a ton of passes, get skier numbers up and then flip it to Vail in five years. It's actually the perfect path for PE. The icing on the cake is you can get financing for almost everything on a mountain which boosts the return considerably.

Math would be this:
Purchase for $1m in a bone sale
Upgrades: $10m with $2m in cash up front, rest financed
Invest another $3m to float operations at a $600k loss per year for 5 years

Total invested: $6m cash

Vail purchased the Peak portfolio for $15.5m per resort on an average straight line basis. This is for places in Ohio that are essentially sloped parking lots with snow guns (grew up skiing in Ohio..). Let's say TL is worth $25m in a sale fixed up.

Sell for $25m, pay off $10m in debt, $15m net to seller. If you show a PE firm an investment where they put in $6m and it turns into $15m in five years people will be beating down the door to get in.

Also there is no requirement for profitability, I'm assuming the seller operates at a loss to pad numbers. If they could operate at break-even it's an even more attractive investment.

There aren't many variables here that need to move to make the numbers work really well.

I used to own an investment research business. When I saw the TL water lawsuit I sent a snippet to some PE/hedge fund friends, a few responded right away trying to figure out how to buy the utility out of potentially BK. The math on the resort is more attractive than a utility. I'm sure I'm not the only one thinking about it in these terms.

 

[crgildart]

From a financial perspective the VR purchase does change a lot. For a PE group there is now a viable exit path.

Someone could buy this, invest $8-10m, sell a ton of passes, get skier numbers up and then flip it to Vail in five years. .

Except the vast majority of potential pass purchasers already bought the THREE YEAR RIDICULOUS Pass and you'd have to either honor those or give them credit to towards another one.. Well, probably don't HAVE to honor them but good luck with local goodwill and word of mouth selling "a ton of passes" if you decide to blow them off.

 

[dbostedo]

From a financial perspective the VR purchase does change a lot. For a PE group there is now a viable exit path.

Someone could buy this, invest $8-10m, sell a ton of passes, get skier numbers up and then flip it to Vail in five years. It's actually the perfect path for PE. The icing on the cake is you can get financing for almost everything on a mountain which boosts the return considerably.

Math would be this:
Purchase for $1m in a bone sale
Upgrades: $10m with $2m in cash up front, rest financed
Invest another $3m to float operations at a $600k loss per year for 5 years

Total invested: $6m cash

Vail purchased the Peak portfolio for $15.5m per resort on an average straight line basis. This is for places in Ohio that are essentially sloped parking lots with snow guns (grew up skiing in Ohio..). Let's say TL is worth $25m in a sale fixed up.

Sell for $25m, pay off $10m in debt, $15m net to seller. If you show a PE firm an investment where they put in $6m and it turns into $15m in five years people will be beating down the door to get in.

Also there is no requirement for profitability, I'm assuming the seller operates at a loss to pad numbers. If they could operate at break-even it's an even more attractive investment.

There aren't many variables here that need to move to make the numbers work really well.

I used to own an investment research business. When I saw the TL water lawsuit I sent a snippet to some PE/hedge fund friends, a few responded right away trying to figure out how to buy the utility out of potentially BK. The math on the resort is more attractive than a utility. I'm sure I'm not the only one thinking about it in these terms.

Two thoughts... this assumes it would be attractive to, and purchased by, Vail at the end of 5 years. I'd put that as a low probability.

Also, the $25M number seems very generous. Yes the $15.5M number includes parking lots in Ohio. But it also includes the New England and PA resorts that likely are worth somewhat to a lot more than TLine. I'd think it would be worth the $15.5 average at most.

 

[Nate Tobik]

If they can't sell this place for more than $15m then the economics will never work. Even the economics of investing for a new owner.

Unless there is some hidden asset, like undeveloped land, or a lot of potential it might be dead in the water.

I agree with crgildart, it will be a hard sell to win over people who have been burned over and over. Same with an investment in a bigger hotel or a better lodge, when the die hards move on it's hard to get them back.

I've had some amazing days at TL, it had it's "rustic charm" but the mountain always won out. Herz should have sold out years ago when the deferred maintenance wasn't deferred by that much. At this point the place needs a complete gut and overhaul, and by the time you do that I'm not sure there is any juice left to squeeze.

The whole saga is a sad dumpster fire. Usually a bankruptcy is great for the subsequent owner because they can purchase assets without liabilities, but in this case there are liabilities far beyond bank financing.

 

[pipestem]

Most people were there for the rustic charm, some of us also for the mountain. All great things end. I am seeing luxury homes where we once skied together. Locals will hike for a few runs and post pictures for the rest of us to reminisce.

 

[Johnfmh]

I attended a home owner association meeting and cookout over the weekend at Timberline. I learned a few things that surprised me.

1. Despite the closing of the mountain, there is still a decent rental market, both in the summer and winter. People are renting at Timberline and skiing at Canaan.

2. Units are still selling significantly above what I paid in 2001. Buyers must feel the mountain will open at some point.

3. The consensus of the home owners is that the mountain will re-open, either in 2020 or 2021.

Tax incentive financing from the county and state plus investment from home owners (over 700) may be another source of financing as would investment from angel investors looking for a tax write-offt. The resort also may be able to get a slot machine license.

 

[scottyb]

Grasping at straws.

Crowds at CVR only gonna get worser.

XC snow biking.

Davis needs a bowling alley.

 

[crgildart]

Or, snowmobiler association buys it, makes minor upgrades to snow making gear, and makes it a full time sled park in the winter. They wouldn't have to worry about the lifts at all other than total demolition and selling what they could for scrap, maybe keep any towers with snow gun potential but tear down the rest..

 

[James]

Or, snowmobiler association buys it, makes minor upgrades to snow making gear, and makes it a full time sled park in the winter. They wouldn't have to worry about the lifts at all other than total demolition and selling what they could for scrap, maybe keep any towers with snow gun potential but tear down the rest..

Is it really fun to go up and down a hill of crappy snow?
I want to say Haystack at Mt Snow was a snowmobile place after it closed and before it became the doomed Hermitage, but I forget.

 

[crgildart]

Is it really fun to go up and down a hill of crappy snow?
I want to say Haystack at Mt Snow was a snowmobile place after it closed and before it became the doomed Hermitage, but I forget.

Almost every season they closed with snow top to bottom rented the terrain to snowmobile clubs. It's a very real scenario IMHO.

 

[jimmy]

I attended a home owner association meeting and cookout over the weekend at Timberline. I learned a few things that surprised me.

1. Despite the closing of the mountain, there is still a decent rental market, both in the summer and winter. People are renting at Timberline and skiing at Canaan.

2. Units are still selling significantly above what I paid in 2001. Buyers must feel the mountain will open at some point.

3. The consensus of the home owners is that the mountain will re-open, either in 2020 or 2021.

Tax incentive financing from the county and state plus investment from home owners (over 700) may be another source of financing as would investment from angel investors looking for a tax write-offt. The resort also may be able to get a slot machine license.

Folks I've talked to are also saying 2020 or 2021. There are two TIF's in West Virginia, one is based on property appraisal/tax and the other is based on sales tax increase. There is also a tax credit for Tourism Development. The ski area reopening won't happen without public participation. The bankruptcy court has ordered that all three cases, H,H&Reichle, Long run Realty and T4SResort be jointly administered. I doubt this is good for those of us who are ready to get them out of the picture.

"A TIF strategy, when properly developed and applied, can help attract new private development and retain existing business within a community. It is designed to utilize the growth in taxes created by new business activity to finance critical improvements within an approved district. The designation of a TIF district within a municipality or county can encourage growth, jobs and private and public investments that improve property tax values and, in turn, ultimately grow revenue.

TIF comes in three forms. Most commonly, it uses the growth in property taxes generated by new development to finance infrastructure enhancements inside the district. Less frequently used, but still a powerful tool, is a Sales Tax Increment Financing (STIF) plan, which uses new sales taxes generated within a STIF district to finance infrastructure and other improvement. The third option is the Tourism Development Tax Credit (TDTC) program, specifically geared toward tourism projects. It does not require the creation of a district, but can be more project-focused." http://www.bowlesrice.com/practices-160.html

 

[Johnfmh]

Using my condo as an example, I’ve seen a 49% decline from the peak market price over the past 5 years or so. Under new resort ownership, that price could jump back to peak or beyond. Multiply that increase by 700 mostly larger, single family homes and the county conceivably could have a very sweet property tax base. Of course, property taxes will have to be raised as property values appreciate but I don’t see too many owners complaining. Those who stay will have viable skiing at the resort and a more robust rental market. Those who don’t like it can sell at much higher prices than the current market. Sales generate tax stamps—more money for the county.

 

[jimmy]

https://www.saminfo.com/headline-ne...8vIdHCy-vUPi1CnEVm3DEa1HnZXU_Xy1Herh9Y8XV28X8

 

[James]

https://www.saminfo.com/headline-ne...8vIdHCy-vUPi1CnEVm3DEa1HnZXU_Xy1Herh9Y8XV28X8

———————
Fred Herz, Timberline president, said: “We are incredibly grateful to have had the opportunity to purchase a raw mountain in Tucker County, West Virginia, over 30 years ago and grow it into the premier destination for mid-Atlantic and southeast skiers."

He continued, "After some challenging seasons, our family has chosen to exit its investment in West Virginia in cooperation and consultation with Griffin Financial Group," which is serving as investment banker for the sale. "We believe it is the right time to pass Timberline on to new ownership."
——————————-

 

[RodneyBD]

Someone call Boyne Resorts and tell them to start their due diligence pronto!

 

[Johnfmh]

What is the asking price? Also, “raw mountain”? That’s an insult to David Downs, the original developer. It Was Dave who had the original vision for the place. He used to own a unit in my development and I always enjoyed chatting with him about the mountain. Good guy. Too bad things did not work out for him.

 

[Dr. Bighair]

Also, “raw mountain”? That’s an insult to David Downs, the original developer. It Was Dave who had the original vision for the place.

Exactly. I wish these media outlets would do a little research and stop allowing Fred and Tracy to attempt to re-write history. The Herz's did not develop or create Timberline. Doc Reichle purchased it from David Downs along with the water utility (which the Herz's also repeatedly falsely claim they developed). Doc Reichle kept on taking cash money out of the resort and not investing anything substantial back in. It had it's hay day when Doc was running it simply due to the local employees, who loved the sport and mountain, running the place....and employees who had a knack for cobbling back together aging infrastructure. Then Doc turned it over to Fred and Tracy who embezzled money from the utility, ran off all the employees who had held the place together and destroyed the ski resort and utility.

But I guess the "raw mountain" story is a little more believable then the camp fire story that Fred and Tracy sold to Trip Advisor and Trip Advisor has published on the front page for Timberline resort.....

"Fred Herz was camping in the Canaan Valley in 1985, while sitting by a camp fire, staring up at a mountain he thought that it would be a great place to ski. He convinced his entire family to buy into his idea and create Timberline Four Seasons Resort. in 1986 Timberline opened for business. Fred is a true visionary. Today we are proud to state that we have the longest trail south of Vermont, the highest average vertical in the SE, and the best glade skiing south of New England.... Our most proud accomplishment, however, is in helping preserve the highlands ecosystem. The Cheat Mountain salamander, a threatened species that is unique to West Virginia, may have a shot at recovery, thanks to conservation efforts that are underway at Canaan Valley National Wildlife Refuge." Trip Advisor

 

[pipestem]

Fred's statement is the most reasonable one I have seen, I feel 2% better.

 

[John Webb]

———————
Fred Herz, Timberline president, said: “We are incredibly grateful to have had the opportunity to purchase a raw mountain in Tucker County, West Virginia, over 30 years ago and grow it into the premier destination for mid-Atlantic and southeast skiers."

He continued, "After some challenging seasons, our family has chosen to exit its investment in West Virginia in cooperation and consultation with Griffin Financial Group," which is serving as investment banker for the sale. "We believe it is the right time to pass Timberline on to new ownership."
——————————-

Gawd. What is Fred smoking !

 

[RichieRich]

Gawd. What is Fred smoking !

??? Same stuff he's selling???