Acquisition increases Lake Tahoe presence for Vail Resorts

Once high-flying Booth Creek Ski Holdings, formerly the operator of 11 ski resorts in Nevada, Washington and New Hampshire, last week divested its flagship operation, Northstar-at-Tahoe, to Vail Resorts Management Co. of Colorado.

The property's real estate remains under the ownership of CNL Income Properties of Orlando, Fla., but Vail Resorts acquired Booth Creek's lease to operate the ski resort.

The sale of Northstar for $63 million leaves Booth Creek with just one property left in its portfolio, Sierra-at-Tahoe Resort. Earlier in the month, Booth Creek sold its Waterville Valley resort in New Hampshire.

The acquisition of Northstar-at-Tahoe strengthens Vail Resorts' presence to both shores of Lake Tahoe. The Colorado company also operates Heavenly Mountain Resort at South Lake Tahoe.

"We are very strategic with our acquisitions," says Kelly Ladyga, vice president of corporate communications for Vail Resorts. "Northstar-at-Tahoe has been one of the fastest-growing resorts in North America in terms of skier visits, and given the resort's substantial terrain, complete renovation of the base village and commitment to guest service, we felt it was the perfect compliment to our collection of mountain resorts."

Northstar-at-Tahoe counted more than 700,000 skier visits for the 2009-2010 ski season. The resort had undergone widespread changes over the last decade with the large-scale retail and condominium developments at Northstar Village and a luxury Ritz-Carlton hotel.

Ladyga says the purchase includes the remainder of a 16-year operating lease for Northstar-at-Tahoe resort, with three 10-year extension options at Vail's discretion. The land and facilities are leased from Florida's CNL Lifestyle Properties.

CNL Income Properties purchased Northstar for $82.7 million on Jan. 19, 2007, then leased operation of the resort back to Booth Creek Ski Holdings.

The purchase of Northstar-at-Tahoe by Vail Resorts includes management of all mountain and base village operations, which comprise 155,000 square feet of commercial space in 60 locations 35 of them are shops and restaurants. Also included in the deal was Northstar Property Management company, which manages about 210 of the 1,800 lodging units in and around the Northstar village.

The newly constructed Ritz-Carlton hotel and its operations were not included.

Jeff Woolson, managing director of the Golf and Resort Properties group for CB Richard Ellis in Carlsbad, Calif., says the value of the deal depends on how much rent is to be paid to CNL Properties by Vail Resorts a figure that wasn't disclosed.

"This was an assumption of the leasehold, so the value of the transaction was undoubtedly based on the net cash flow after paying rent to CNL that was originally agreed to by Booth Creek. Absent of developable real estate, typically investors these days are looking to pay around 7 to 8 times cash flow for an operating business like a ski resort."

Ladyga says the deal had been in the works for a quite a while. "We are continuously looking for the right opportunities," she says.

Ladyga adds that Vail Resorts plans on investing capital at Northstar to continually enhance guest experience. Vail Resorts also operates Vail, Beaver Creek, Breckenridge, Keystone and Arapaho Basin ski resorts in Colorado.

The management team at Northstar Booth Creek CEO George Gillett, President and COO Chris Ryman, and Vice President Betsy Cole were released, and Vail seeks a new general manager for Northstar-at-Tahoe. Julie Maurer, vice president of marketing and sales for Northstar, will oversee marketing and sales for Northstar and Heavenly.

The acquisition is a boon to season pass holders at Heavenly and Northstar. Heavenly skiers and snowboarders can ride at Northstar or Sierra-at-Tahoe, and Northstar Double-Whammy pass holders can access the trails at Heavenly Mountain Resort.

"I am excited about the strength Vail Resorts brings as one of the industry's leading ski resort tenants," said Byron Carlock, president and CEO of CNL Lifestyle Properties Inc. "Northstar-at-Tahoe skiers, and skiers at other Vail resorts will be excited by the opportunity to ski more resorts through various season pass packages."