15 Ski Resorts To Change Hands In Recreation Mega Deal

In a press release Tuesday, EPR Properties announced that it will expand it’s recreation business with, among other things, the purchase of Northstar California Resort from CNL Lifestyle Properties and the purchase financing of 14 other ski resorts across the nation.

EPR Builds On Their Expertise In The Recreation Segment

EPR is a Kansas City, MO based REIT (Real Estate Investment Trust) with investments exceeding $5 billion in the Education, Entertainment and Recreation Industries.

EPR will invest approximately $700 million in the transaction. They will purchase the Northstar Resort, 15 non-ski attraction properties and five small family entertainment centers for approximately $456 million. The rest of the deal is in the form of approximately $244 million in financing to Och-Ziff Real Estate (OZRE), who will purchase the other 14 ski resorts from CNL Lifestyle Properties. EPR will finance the transaction with $647 million of the Company’s common shares and $53 million of cash. EPR Properties expects to close the transaction in the spring of 2017.

President and CEO of EPR Gregory Silvers says “We are extremely pleased to announce this transaction, which is the culmination of a two-year process of disciplined underwriting, due diligence and negotiations.” Silver goes on to state that the properties and financing deal is expected to add immediate value as well as “diversify our portfolio with proven, durable assets that are aligned with the positive trends we are seeing in the experience economy”

A Booming Experience Economy?

Skiers and Snowboarders flock to American ski resorts by the millions, but is the “Experience Economy” of snow sports really trending positive as Mr. Silver suggested? The most recent Snow Sports Fact Sheet from industry trade group Snow Industries America show the total skier numbers in the 2014/2015 season at 53.6 million user days. Thats the second lowest number on the chart in 15 seasons.

So is this recent consolidation a sign of positive trends or sinking ships? Revenue seems to be climbing with product purchases including equipment, outerwear, rentals and services at it’s second highest level in the same period of $4.7 billion. This would suggest that more people are displaying the skier lifestyle but not actually showing up to the mountain.

There are other possibilities for the ski industries positive revenues. The Aspen Times posted an article in January of 2015 that suggests higher lift tickets are driving industry growth. Jamie Schectman, the CEO of Mountain Rider Alliance, LLC points to the consolidation of Alpine Meadows by rival operator KSL in 2011. Before the purchase an adult at Alpine Meadows would pay $72 for a lift ticket. The most recent prices on Liftopia show prices starting at $114. A 60% increase in ticket price could be inflating the industries supposed rising revenues. (prices from Aspen Meadow are not yet available for the upcoming season)  Operators may argue that a skier gets more for their money with a more expensive ticket. However, there are still only 7 hours in a ski day and regardless of the acres of skiable terrain a 60% increase in ticket price equals a 60% increase in revenue for the resort operator even if the number of skier days remains the same.

Regardless of the future of the ski industry, this transaction is an indicator of further consolidation in the resort world. Mega managers and operators have the benefit of deep pockets and diversified portfolios. While this can be a benefit to users in the form of more and newer amenities it also means the operator is out to get more of the cash in your wallet. As evidenced by Silver’s statements in the press release, the end goal of this transaction is to continue to provide it’s shareholders with “a track record of delivering consistent and reliable cash flows.”