Luxury Resorts in Crisis
Moonlight Basin Faces Foreclosure by Lender
The five-year-old Montana resort faces an uncertain future as it struggles with massive debt and a moribund real estate market.
By Jonathan Weber, 8-05-09
Moonlight Basin, the ski-and-golf resort and real estate development near Big Sky, is facing foreclosure by its major lender, Lehman Bros., according to numerous sources with knowledge of the situation. A letter from Moonlight founder and owner Lee Poole to resort property owners said Lehman had “made the decision to begin foreclosure proceedings,” though the Madison County court clerk said no foreclosure notice had yet been received.
The letter said “It is Lehman’s intention to continue summer and winter operations at the resort.” A spokeswoman for Lehman Bros., which is in bankruptcy but continues to operate as it unwinds its many businesses, declined to comment.
Moonlight borrowed about $170 million from Lehman Bros. in 2007, and the funds were used to buy out Poole’s two partners and continue construction at the property. The investment bank collapsed last fall, and at around the same time Moonlight began to experience a severe cash squeeze due to the collapse of real estate sales. The resort did open for ski operations last winter, and the first nine holes of the spectacular Jack Nicklaus golf course have been completed. But it’s been clear since the fall that Moonlight would not be able to continue to operate without a sale or a major cash infusion.
Moonlight’s troubles are mirrored at high-end resorts across the West, including Tamarack in Idaho, which is now shut down, and the Yellowstone Club in Big Sky, which recently emerged from bankruptcy. The market for expensive vacation properties has all but collapsed over the past 18 months and there are no signs yet of any revival.
Moonlight opened in 2004, and features spectacular expert skiing on one face of Lone Peak and a relatively conservation-minded approach to development. The property borders magnificent backcountry near the Lee Metcalf wildnerness. Like all new ski resorts, the business model was based on the sale of real estate, and hundreds of houses and condos have been built. While the soaring main lodge and restaurant and many of the ski lifts are in place, other key pieces of infrastructure, including the main base lodge of the ski hill and additional lifts, are not yet built.
Poole, a one-time ranch hand from Ennis, and other executives have been aggressively shopping Moonlight for the past year, and Lehman has continued to provide some funding to keep the resort going. It’s not clear what triggered the decision to pursue foreclosure. Nor is it clear exactly what will happen from here; a bankruptcy filing could be a part of the restructuring.
In a foreclosure, a lender takes possession of the property in lieu of repayment of a loan, though if the property is worth less than the loan it can also pursue collection of the difference. In many loans of this type there is also a personal guarantee, and if that were the case at Moonlight, Lehman could potentially pursue Poole’s personal assets.
Lehman, as the new owner of the property, would likely bring in an operating company to run the recreation activities, or could partner with neighboring Big Sky Resort for the skiing and manage the real estate separately. Moonlight has an agreement with Big Sky enabling skiers to use both areas on one ticket, and the two resorts have been promoting the combination as “The Biggest Skiing in America.” But that agreement expires after next year.
Employees were told in a meeting last week that Lehman intended to keep the team in place, though they might be fired and and then rehired, sources said.
In the letter to homeowners, Poole said Lehman had recently “green lighted and funded several projects at the resort in preparation for this coming winter and next summer season and our team is hard at work on these projects.”
It would very interesting to know what Mr. Poole assets were prior to the deal he struck for Moonlight as compared to now. Joe once said to me while playing a round that" Blixseth was a psychopath and Lee eventually would go down in flames". Coming from a major funding partner who sold out and did not get greedy it sounded right on. As I had mentioned many months ago the writing was on the wall. Lee, how much money have you taken out of Moonlight? It is a shame since this ski hill is awesome except for some flat light. If a bankruptcy takes place it would be nice to see same Judge in the YC case. Seize assets! Maybe Jack Creek will become a public road now! It is a wonderful shortcut from the Madison River Valley to the Gallatin River Valley and everyone should be able to enjoy it! All I can say is birds of a feather flock together. Jim, has your 30% in WPT paid off yet and how did you become Timmy's partner? Maybe a loan from your father in law that went unpaid? I understand Spanish Peaks has been looking to settle outstanding debt for 30 cents on the dollar. Have you paid the Jackson Hole guy from the aviation business or did he write you off? How is the Spanish Peak property selling? I thought so. What will the next chapter in the Big Sky journal be?
Comment By Mehmnet, 8-06-09Well kids, the GRAVY TRAIN is OVER!
Montana grew/blew up during the boom years of the past two decades because there was nowhere else to expand in the US but here.
All that money is now going away - there will be plenty more bankruptcies of high-end resorts.
You asked for CAPITALISM - you GOT IT!
Lets not forget who took the risk and developed THE premier resort in North America! Bar none!
Comment By Ann, 8-06-09I can't say as I'm crying over this. It's really sad to see that area get any developent of any kind. Too much urban sprawl happening, and the wildlife suffers because of it.
The wildlife and the beauty is what draws people, but they turn right around and turn it into the same thing they tried to get away from.
its seems to be a catch 22..we want the "americian dream" yet look at the price we have to pay..and how the big boys must be hurting now..but don't we buy into it to? i know i like to ski at moonlight and have worked there as well and made my money off the rich and famous?
Comment By wapitidropiti, 8-06-09Now let's open the Jack Creek Road to everyone instead of having Lee Poole,the pseudo environmentalist,collect $100.00/month for people to use it.
Comment By bearbait, 8-06-09Moonlight seems like a good place for tourists. It is they who bring winter income to support the whole of Big Sky....It does take a wad of dough to buy a life ticket anywhere now. And even then the resorts are tanking. There is something inherently wrong with the business plan.....or the American economy. Skiing has really become a rich man's sport, and that is a shame.
Lehman Bros. ought to know something about running a ski area. Wasn't their CEO the owner of Whitefish Ski Area? And still is? Ski area owner. Haven't followed the CEO deal. That part of my Roth, the conservative Lehman Bros preferred stock, was sacrificed on the Paulson alter....for my own good, you know. And to save GoldmanSachs. Investing is a rigged game. You know when it is going to tank and make a lot of people poor: when blue collar guys and white collar clerks have stock tips. That is the time to sell. When a junior high social studies teacher touts a stock. Bail out as fast as you can.
I live in the Madison Valley & DON'T want the Jack Creek Road opened to the public. When the cycle turns back up, condo sales up at Lone Mtn will heat up again. Wouldn't they love to move all their 20-something party-hound workers down here & sell that space up top? Ennis would get the crowding & social problems, Big Sky gets the profits. & I bet our emergency services personnel (many voluneers) here would love responding to a bunch of wintertime DUI rollovers in Jack Creek Canyon & on the bench between the canyon & Jeffers. Thanks but no thanks.
Comment By Sharkbait, 8-06-09Let us assess risk. Plum Creek deal that produced both YC and Moonlight. Who really risked hard cash? Blixseth did not have much except land the feds wanted.Poole I am not sure how much he brought to the table. Joe, on the other hand, took some risk and got out early. Good job! After separation of the property involved did not Blixseth sue Lee, Joe to get access to a specific peak? I think Timmy probably made a slight miscalculation. Who won this suit?
I will agree that YC, Lone Mt, and Moonlight combined is by far the some of the best terrain in North America as long as there is snow. I do believe all three will thrive because of this fact. Ownership MUST understand the economical implications of a middle class family trying/wanting to ski great terrain. I grew up on the East Coast and was fortunate to have a family ski hill. At the top sat a 1955 Chevy wagon with car rims mounted to trees with a 1200 foot rope to pull us up the hill. it was a family gig. Friday and half of Saturday were packing days and Sunday was for fun! Economic times can make it difficult for a family to enjoy the beauty here in Montana on the slopes. I will always cherish those family days skiing on Amherst Rd, MA. The property is still owned today by my grand parents Phil and Kay. God Bless them both!
Dear Drover,
Look at the positives of a new road. Ennis kids can see Big Sky ski area and because of the lack of a road it is over a hundred mile drive away. What a shame! The next Bode Miller may be in Ennis.
Look at the employment that would open up to the people of Ennis.
Look at the jolt your economy would receive. Ennis needs it. Capitalism presents only two choices-expand or die. Your ideology is a recipe for failure and always has been. Please don't go down that path.
I'd like to thank Lee Poole and Moonlight Basin for their generosity - giving kids with a "B" average or better a free season pass is going above and beyond! Thanks for helping to keep my (now graduated) high-schooler motivated to achieve good grades. He's had a Moonlight pass since the beginning. He and his buddies rode the free Moonlight bus up to the area every weekend this past year. Good clean fun - kept them in shape and out of trouble. Thanks again Moonlight!
Comment By Big T, 8-07-09Dear Drover,
Funny that someone from Madison County would be so opposed to being connected to the Big Sky/Moonlight area. You guys haven't had as issue with all of the tax dollars that make there way over there? Perhaps if you don't want to be connected at all then the county lines could be moved and Big Sky/Moonlight can join Gallatin County?
Al G;
You are very welcome, the MBRT program is something I helped to come up with and I am very proud of that program.
It means a lot to everyone at Moonlight Basin, including Lee.
People can always find fault when someone succeeds or when they experience a setback. Resort Development isn't an easy road and there will be plenty of critics.
I have been involved with the ski industry for 25 years and can say that my time with MLB has been some of the best of those years.
We will keep on keepin on until this settles out and then move forward.
The message I keep getting from the people above me is that we will have a ski season and we will not compromise the values that have earned us a reputation for excellent guest service and a genuinely friendly place to visit.
Dear Big T,
Great Point!
Why not have Big Sky withdraw from both parasitic counties and we form our own county.
I'm tired of paying the lions share of their taxes and being mean mouthed at the same time. We have our own infrastructure needs in Big Sky and neither county has ever spent a dime here and never will.
i also want to thank moonlight for all the good things they have done for our community..i truly am grateful and know that i world is not perfect but loving kindness and gratitute is the way of the heart..thank you
Comment By horst, 8-10-09Locking land away for the exclusive use of privileged folks is in keeping with the kind of capitalism which came crashing down in 1929 and several times since then.
I reckon this is the kind of wilderness envisioned by flat-top's bill in the senate.
this guy ^ makes me laugh! Haha!!
Comment By HWSkier, 8-12-09I'm with you, Frank. "Locking land away for the exclusive use of privileged folks" - WTF?!? It's a freaking ski resort. Buy a lift ticket and go where you want. Take a hike up there in the Summer. It's open to the public and it's beautiful. Nothing is "locked away." I hope Lee gets a last minute financial partner and this foreclosure goes away....but if not, the new owner should pump some cash into MLB and keep everything moving in the right direction. That's the only way to preserve the long-term value of the resort.
Comment By Mike, 8-18-09Nothing negative, nothing positive here just an observation. I'm living what appears to be the exact same situation here at Tamarack Resort in Idaho. The comments here mirror the comments I hear here. Both negative and positive. I hope your problems get ironed out for the benefit of everyone. Probably an impossible hope but a sincere one just the same.
Comment By HWSkier, 8-19-09Any chance we can get an update on this situation from Mr. Weber? Has the foreclosure notice been received yet by the Madison County clerk? Lee Poole's letter to homeowners went out almost a month ago, now, but there has been no update.
Comment By HWSkier, 9-14-09Update please - heard that the foreclosure notice was finally filed today.
This article was printed from www.newwest.net at the following URL: http://www.newwest.net/city/article/moonlight_basin_faces_foreclosure_by_lender/C396/L396/