Alterra Mountain Company has announced that it has entered into an agreement to purchase Arapahoe Basin in Colorado, from Dream Unlimited Corp., expanding Alterra’s portfolio of destinations in the Rockies.  What does this mean for real Colorado ski real estate?  Which resorts are now at “risk”?

 

Alterra buys Arapahoe basin

Many were surprised by the move of Alterra to buy Arapahoe Basin, but it fits nicely with Alterra’s Ikon pass strategy.  A-basin give it a foothold into a close in Denver ski market that they own and it complements there other three resorts: Winter Park, Steamboat, and Snowmass within Colorado.

Look for substantial improvements at Arapahoe Basin

We have seen as soon as Alterra acquires a resort, they spend substantial capital on substantial improvements.  For example a brand new Gondola was installed at Steamboat Resort and in Winter Park over 100 million of Capital improvements are in the works from employee housing to new base areas, etc…  Long and short the investment by Alterra has made huge improvements in each respective mountain.

Real estate increases around Arapahoe Basin:

We have seen in the past that as soon as Alterra or Vail buys a resort real estate is impacted dramatically. Winter Park and Crested Butte are prime examples with real estate increasing at double digits since the announcement of the purchase.  In the case of Arapahoe Basin, it is a drive up resort, but there should still be some upside in Real estate in Idaho Springs, Empire, and Georgetown along the I70 corridor.

No major changes or impacts on Vail resorts

Although A-basin is strategically important for Alterra, I don’t think Arapahoe basin will be market moving one way or another for Vail resorts properties like Breckenridge, Keystone, or Vail as they are targeting different users.

One resort is at risk with the new acquisition

Now that Alterra and the ikon pass have a close in Denver resort, the need for a partnership with Powder Corp that owns Eldora and Copper Mountain is considerably less important to them strategically.  My guess (I have no information than what is public) is that Alterra will at some point revisits the partnership with Copper Mountain which would be a huge blow to Powder Corp (the owner of Copper and Eldora).

Consolidation required for survival

I’ve said this countless times that we will continue to see huge consolidation in the ski industry as consumers migrate to either the Ikon or Epic pass.  It will be difficult if not impossible for smaller resorts to stay independent unless they are very high end resorts like Telluride or Jackson Hole (both of which have partnerships with Vail and Alterra respectively).  Look for the trend of consolidation to continue amongst the smaller resorts throughout Colorado and the nation.

Summary

I was surprised about the acquisition of A-basin by Alterra as it is a small drive up resort that is different than their typical destination resorts, but if fits in their portfolio nicely and in my mind puts into question their partnership with Powder Corporation.  I don’t see this acquisition being market moving in the Summit County market or having much impact on Vail resorts.  On the real estate side, on the East side of the tunnel (Georgetown, Empire, and Idaho Springs) there could be additional upside.

The Acquisition of A-basin does further highlight the huge consolidation taking place in the industry.  Either a resort is ownded or affiliated with the two major passes (Ikon or Epic) or is at risk of acquisition or totally going away.  It will be interesting to watch how this unfolds with other smaller resorts.

 

Additional Reading/Resources

 

1. https://www.alterramtn.co/news/alterra-mountain-company-to-acquire-arapahoe-basin-in-colorado
2. https://www.prnewswire.com/news-releases/winter-park-resort-continues-to-look-ahead-and-make-upgrades-and-improvements-for-both-employees-and-guests-301922462.html

 

 

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Written by Glen Weinberg, Owner Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine,  The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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