Related Cos. to sell Snowmass Base Village assets
October 6, 2015
After a long and rocky road, Related Cos. is exiting Base Village.
KSL Capital Partners, LLC, a private equity firm with offices in Denver, and East West Partners, the Vail-based developer of Beaver Creek, have agreed to purchase all of Base Village except for Lot 2 from Snowmass Acquisition Co., the subsidiary of Related Cos. that acquired the stalled development in 2012. The agreement is contingent on the Snowmass Village Town Council's final approval of amendments to current plans for the stalled project.
Snowmass Acquisition Co. purchased the assets in 2012 for $90 million, nearly half of the $169 million that Related Cos. and another partner paid for the property in 2007. Related didn't release the amount of the pending transaction Tuesday.
Snowmass Acquisition Co. will continue to act as the applicant, and Jim D'Agostino, president of Related Colorado, said on Tuesday that it doesn't intend to alter the application.
"There are no proposed changes to the application or the timeline to submit the application, which is on schedule to be submitted later this month," D'Agostino said. "The goal is for approval by the end of the year so construction can start next spring."
East West and KSL will assume the role of Base Village master developer and will oversee development of the rest of the project, which includes the next phase of the Viceroy Snowmass and Lot 3, according to a statement. The purchase includes unsold units in the Viceroy and the rental management agreements and homeowners associations of Base Village.
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Lot 2 will still be developed by Aspen Skiing Co., which has plans for a lodge modeled after its Limelight Hotel in Aspen.
"At present, we intend to proceed as planned with closing on the purchase of Lot 2 in the coming months and starting construction of Limelight Snowmass in the spring of 2016, assuming the final approvals are granted by the town of Snowmass Village prior to the end of December 2015," said Mike Kaplan, CEO of Skico, on Tuesday.
What about Sunrise?
Sunrise Co., a development firm that also manages the Dancing Bear in Aspen, had an agreement with Snowmass Acquisition Co. to take control of Base Village Lot 3 upon approval. That agreement was terminated on Oct. 1, D'Agostino said. He declined to comment Tuesday on details of the termination.
"Last Thursday, Related gave Sunrise notice of a purported default under our agreements related to financing," said Randall Bone, CEO of Sunrise, which has invested $900,000 over the past 18 months into working on a vacation club for Buildings 7 and 8. "Once it became clear that the town was going to approve the taller buildings (7 and 8) as part of the design changes related to Sunrise giving up Building 6 and Related building it for the town as a community purpose facility, we finalized our underwriting and subsequently received term sheets for the equity and debt financing. We have responded to the notice, cured the purported default and given notice that we intend to continue under our agreements to purchase and develop the property."
Bone said the company was surprised by the notice from Related and the subsequent announcement of a new agreement.
"We are in ongoing discussions with Related," he said. "Given our positive relationship to date with Related and with the town of Snowmass Village and our shared commitment to continuing the development of the Snowmass Base Village, I am hopeful that we will able to resolve this in a manner that is positive for everyone involved."
The Snowmass Village Town Council approved Snowmass Acquisition Co.'s preliminary plan application with the amendments for Base Village on Sept. 28. A few short days later, they learned about the termination of the agreement with Sunrise before the announcement of the ownership change, which gave some of them pause about what that meant for the project.
"I feel like when we approved the process knowing that Sunrise was building those buildings and having the confidence we do in their product and that they're local … was very reassuring," said Councilwoman Alyssa Shenk. "There's a lot of information we don't have."
But on Tuesday, Mayor Markey Butler, who had instructed town staff on Monday to find out more, said she felt reassured having more information and expressed her confidence in East West Partners. Butler organized a council tour of Beaver Creek led by Harry Frampton, founder of East West Partners, in July, which representatives of Related attended.
"We've got a really good solid developer now," Butler said on Tuesday. "Frampton knows how to do ski mountain resort communities, and he is a very highly revered individual throughout the Vail Valley and he's known internationally."
Who's the new guy?
East West Partners has looked at getting involved in Base Village twice before — once in 2001 when Aspen Skiing Co. was courting partners and again when the property was in foreclosure and controlled by banks, said managing partner Craig Ferraro, who was chief financial officer of Aspen Skiing Co. before joining East West Partners in 2000, according to the company's website.
"We've had various discussions with Related about potentially being involved with Base Village in some capacity," Ferraro said. "Those more recently moved to another level, especially as the (amendment application) was starting to make its way through Town Council."
Having town approval of that application "takes at least one uncertainty off the table," Ferraro said. Snowmass Acquisition Co. still hopes to gain that approval this December so that new construction can begin next spring, D'Agostino said.
While East West has never developed in the Roaring Fork Valley, it has managed properties locally through its luxury homes division in the past, Ferraro said. In addition to Beaver Creek, East West Partners has developed in Deer Valley, Lake Tahoe and Summit County. Its portfolio also includes projects in Denver, Charleston, S.C., and Kauai, Hawaii.
East West and KSL have had a partnership since 2011 and are currently working together on the completion of Empire Mountain Village in Deer Valley, according to a statement.
"KSL and East West are uniquely experienced and capable of successfully bringing Base Village to its final phase," D'Agostino said. "They have a combined 50-year history of developing/investing in travel and leisure businesses. … We are confident that the partnership will seamlessly step into our role as master developer and will deliver the multiseason, best-in-class resort experience we have all long envisioned and worked so hard to achieve."
Residents and employees of Snowmass Village have been speculating for months that Related Cos. was planning its exit from the market, starting with the abrupt resignation of Dwayne Romero from Related Colorado's helm and most recently with the release of its non-Base Village rental management agreements in Snowmass to First Choice Properties.
At that time, representatives of the company said no layoffs in addition to some that occurred this summer were planned, and that remained true as of Tuesday, according to Craig Monzio, vice president of development for Related Colorado.
The company said in a statement last week that it was focusing its resources on Base Village.
"We remain committed to Snowmass Village, and this transaction underlines our focus on Base Village," Monzio told The Aspen Times. "As Jim (D'Agostino) mentioned in the press release, Snowmass Hospitality's long-term goal remains strengthening the Base Village and providing our owners and guests with exceptional service, luxury products and amenities."
Related Colorado, through its affiliates, still owns Club Commons II, Mountain Chalet, Snowmass Inn, Snowmass Mall and the Snowmass Center, noted the statement released Tuesday.
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