Mike Solimano VBM Cover Story

[Mister Moose]

On a positive note - houses between 350K and 600K close to the access road are going pretty quickly if priced properly.

"Priced properly" is realtor-speak for "bleed to the extent necessary to get a sale within 90 days." It has nothing to do with replacement cost or prior values in a better market. Prices today are down 25-35% from 2006. That's what "priced properly" means to someone holding the mortgage on a condo they bought in 2005, and it's far below replacement cost today. Many are holding on rather than sell for less.

I did quick survey of condos that have sufficient sales volume and have consistently similar units that I'm familiar with, tracking sales in the last 3 years:

(For instance, High Ridge is harder to track with all the differences in views/no views, loft/no loft, ground floor vs 3rd floor.)

Colony Club (very stable, low fees, roomy 3BR with finished walk-out basements)
3 sales in the last 3 years, 205, 210, 225. This is fairly flat from what I've seen in the last 5 years.

Glazebrook Like Colony Club but midget basement and closer to the mountain. 4 sales of a 2BR unit, 130, 185, 200, 218. The 130 was a short sale. The other 3 are strong sales figures and show some appreciation off the bottom, which I would peg at 160k.

Topridge Built in ~2006 these units are higher end and are the most recent new condo development other than the Heights which only did 4 units. Topridge 34B recently sold for 569, after 642 days on market. Clearly that must have been in rough shape. It sold new in December 06 for 840. Other recent sales are 620, 675, 490 (foreclosure) and 612. The interesting thing here is that across the board days on market is very low at 3-60 days. That's extremely good for a market that typically sees 3 digit numbers, well into the 200's and beyond. While Topridge prices are down to an average 635, which is down 25% from what it sold new for in '06, demand for discounted new units seems strong, but not in much volume.

Condo sales have been on a slow steady upward volume trend in the last 6 years, from 50 units per year to 75 units per year. Prices have not gone up though.

As long as Realtors are using the "priced properly" verbiage, you know condo sales will be slow.

One think we don't know is how many condos are in those 6 buildings depicted. It looks like at least 8, but these drawings are very preliminary. I said 2 years was on the upside, ie optimistic. Having reviewed the market and scale of the proposed buildings in more detail, I'd tend to agree with Rogman's longer time frame expectations.

Since it's been 11 years since Topridge, and it will be the best ski-in condo location on the mountain, there should be a little pent up demand, but in a market of 75 condo sales per year town wide (Only 3-4 of which are over 400K) , how much additional demand can there be?

As good an omen as the low days-on-market Topridge has, it's offset by the very low number of sales above 400K. There were only seven condo sales in 2016 over 250k.

It's going to be very interesting to see what size condos and for what price per foot they build.

[da Pimp]

For a single Highridge data point: friends bought 2 bdrm with lockout in mid 90's, paid $135. Over the years did a lot of improvements plus the mandatory refurbishings to stay on the Killington rental program. The last ten years they were on the full program, received about 1/2 of their annual fixed costs not including mortgage, thanks to the huge percentage taken by Killington. Rent it yourself, do all the work and good luck. Watched the value rise to a max around $250-$265, but ended up selling it 2 years ago for $145 after marketing it for a year with only a few tire kickers asking about it.

Killer for Highridge is the high condo fees, although you do get that nice pool/tub/exercise facility if you are so inclined. Bus system works OK.

Although you can kind of ski home if athletic, you need the bus to get to the hill. Not close enough to call it slopeside. So my question is - would a 2 bedroom unit actually slopeside and probably builders grade stuff done poorly get $400-$500 just because of location? You certainly will never rent it out enough to cover even a portion of your costs. So buyers in a few years (maybe) will probably be millennials with two salaries or a well off family purchasing for personal use. Plus a few of those business write offs. A lot can happen to drive future pricing up or down a lot. If nothing much changes in the Killington RE market, I can't see a village offering a payback for all that initial village & unit construction cost. SP Land will fillibuster. That's what I am hoping.

Hey, maybe SP Land will sell out to Vail and Vail will own the village rights, do it right, and figure out how to squeeze POWDR out of another mountain ops. That's what I am dreaming about.

[Highway Star]

Improving the mountain ops with sorely needed chair upgrades, decent lodges, parking lots, keeping a long season, blowing more snow will combine to add in the missing 150,000 to 200,000 daily visits that they used to enjoy in the past.

This will never happen. Pure fantasy.

The only thing that is going to increase prices is increased demand.

The only thing that is going to significantly drive demand at this point is growth.

Killington needs to grow by providing more *good* lifts, more properly laid out trails and more efficient lodges that handle people better, improving the skiing experience and driving repeat business.

They need to build the Interconnect and revise the lifts on Rams Head, Snowdon (plus trail layout) and Snowshed.

[Highway Star]

While I'll be thrilled to get any South Ridge chair back, I'm not holding my breath for it to happen or for the new Bear condos to actually break ground.

[hillbangin]

So my question is - would a 2 bedroom unit actually slopeside and probably builders grade stuff done poorly get $400-$500 just because of location? You certainly will never rent it out enough to cover even a portion of your costs. So buyers in a few years (maybe) will probably be millennials with two salaries or a well off family purchasing for personal use. Plus a few of those business write offs.

Uhhh - that's no different than any other ski town in the country. Unless it's one of the 3 season ski areas - Aspen, Jackson, Sun Valley, etc

There are always going to be bazillion dollar houses - and dumps off the trails. Crappy condos, and nice condos.

If you want to invest in real estate go to the city, the beach, or a lake.

If you want a place to ski - buy a ski house.

[Bubba]

So my question is - would a 2 bedroom unit actually slopeside and probably builders grade stuff done poorly get $400-$500 just because of location? You certainly will never rent it out enough to cover even a portion of your costs. So buyers in a few years (maybe) will probably be millennials with two salaries or a well off family purchasing for personal use. Plus a few of those business write offs.

Uhhh - that's no different than any other ski town in the country. Unless it's one of the 3 season ski areas - Aspen, Jackson, Sun Valley, etc

There are always going to be bazillion dollar houses - and dumps off the trails. Crappy condos, and nice condos.

If you want to invest in real estate go to the city, the beach, or a lake.

If you want a place to ski - buy a ski house.

Old adage is that you don't buy vacation property as an investment; you buy for your own enjoyment. That being said, there are places where they also pan out as good investments. (i.e. The Hamptons). That being said, does Killington really cater to the high end market that is currently skiing Stowe or Stratton, at least in the numbers required to support a village development project the size of Killington's? Certainly not in the near term, at least in my opinion.

[da Pimp]

Good point about catering to the high end. Mike made a comment about that - "We don’t aspire to be ultra high-end like Stowe or Aspen. Our business model is middle-upper end but never ultra high-end". I wonder if the SP Land business model conflicts with the mountain? Certainly SP wants to sell everything for as much as humanly possible. So would POWDR, they have 30% interest in those profits. But what will drive the high end pricing besides location-location-location, I'm not sure at this point. I do not foresee the village properties functioning where you get your butt kissed every step you take. So that extremely well off ultra high end clientele will not be purchasing in the village. Affect pricing? I would imagine so.

[rogman]

Does anyone really expect E2M/SP Land to ever break ground on the village? I don't. I expect them to continue to try and wrap up the village plans with a nice neat bow so they can sell it off to some other sucker for whatever they can get. The question isn't whether the village build out could make money, I'll assume it could. The problem is there are plenty of other opportunities with far less risk where E2M could invest. What they are spending now is relative chump change. Risks going forward entail:
1. High upfront costs (land/road/utility prep)
2. Vermont second home tax laws hurt the market relative to other locales.
3. Lack of demand (flat skier visits)
4. Climate change (When you are looking at a 25 year horizon, you have to include that impact in your calculations)
Small projects like Bear with a shorter horizon and less upfront costs will continue to be built, but something the magnitude of the village seems like a long shot.

[yiddle on da fiddle]

Rogman.....for the win. SPOT on in his vantage point. K knows who their proverbial "target market" is...Powdr?..does not. Nor does SP....the " if you build it they will come" mentality is so off the mark on this one as to be laughable...

[Bubba]

Does anyone really expect E2M/SP Land to ever break ground on the village? I don't. I expect them to continue to try and wrap up the village plans with a nice neat bow so they can sell it off to some other sucker for whatever they can get. The question isn't whether the village build out could make money, I'll assume it could. The problem is there are plenty of other opportunities with far less risk where E2M could invest. What they are spending now is relative chump change. Risks going forward entail:
1. High upfront costs (land/road/utility prep)
2. Vermont second home tax laws hurt the market relative to other locales.
3. Lack of demand (flat skier visits)
4. Climate change (When you are looking at a 25 year horizon, you have to include that impact in your calculations)
Small projects like Bear with a shorter horizon and less upfront costs will continue to be built, but something the magnitude of the village seems like a long shot.

I think the Bear development project is exhibit A showing Powdr's lack of confidence in the village being developed anytime soon (or ever). Do you really think they'd support development that would directly compete with the village?

[Mister Moose]

SP Land would do far better to

● Find a design that can be built more incrementally.
● Find a design that allows ski-in (like the Bear proposal) instead of trudge-to.
● Find a design or swap that allows more conservation of existing parking.
● Admit the loss and build what will sell, not what will cover the capitalized cost of the ASC note but no one wants to build.
● Hold the parking lots for last, not first.
● Consider a Village center that only/primarily has commercial space, is built after more residential units are built first to support it, saves more parking, and places the residential space on a Ski-to-trail, walk-to-Village distance up along Snowshed and Ramshead or Vale. I would far rather walk to dinner in shoes than walk to skiing in ski boots and gear.


Because SP Land has owned it for roughly 15 years, this is the 11½ year anniversary of the SP-POWDR marriage, and there are no kids yet.

[Highway Star]

It would be nice if we could get an owner/operator that was interested in actually keeping the resort competitive in the industry, as opposed to bleeding it dry.

[rogman]

SP Land would do far better to

● Find a design that can be built more incrementally.
● Find a design that allows ski-in (like the Bear proposal) instead of trudge-to.
● Find a design or swap that allows more conservation of existing parking.
● Admit the loss and build what will sell, not what will cover the capitalized cost of the ASC note but no one wants to build.
● Hold the parking lots for last, not first.
● Consider a Village center that only/primarily has commercial space, is built after more residential units are built first to support it, saves more parking, and places the residential space on a Ski-to-trail, walk-to-Village distance up along Snowshed and Ramshead or Vale. I would far rather walk to dinner in shoes than walk to skiing in ski boots and gear.


Because SP Land has owned it for roughly 15 years, this is the 11½ year anniversary of the SP-POWDR marriage, and there are no kids yet.

E2M and SP Land are not going to change the design because they will never walk away from their sunk costs. That would require admitting to their investors that they f'd up. Their hypothetical buyer won't change the plan either because it's already gone through all the Act 250 hurdles. They'd think they're buying a build to print plan. Regardless, I don't know how you avoid the huge upfront infrastructure costs, since I doubt they can just subdivide and start selling house lots.

[Bubba]

SP Land would do far better to

● Find a design that can be built more incrementally.
● Find a design that allows ski-in (like the Bear proposal) instead of trudge-to.
● Find a design or swap that allows more conservation of existing parking.
● Admit the loss and build what will sell, not what will cover the capitalized cost of the ASC note but no one wants to build.
● Hold the parking lots for last, not first.
● Consider a Village center that only/primarily has commercial space, is built after more residential units are built first to support it, saves more parking, and places the residential space on a Ski-to-trail, walk-to-Village distance up along Snowshed and Ramshead or Vale. I would far rather walk to dinner in shoes than walk to skiing in ski boots and gear.


Because SP Land has owned it for roughly 15 years, this is the 11½ year anniversary of the SP-POWDR marriage, and there are no kids yet.

E2M and SP Land are not going to change the design because they will never walk away from their sunk costs. That would require admitting to their investors that they f'd up. Their hypothetical buyer won't change the plan either because it's already gone through all the Act 250 hurdles. They'd think they're buying a build to print plan. Regardless, I don't know how you avoid the huge upfront infrastructure costs, since I doubt they can just subdivide and start selling house lots.

Bingo! This is the same plan, albeit with very minor adjustments, that's been on the table since Centex was involved more than 10 years ago. They have to know it's a dog but it's their dog and their sticking to it.

[Highway Star]

....the " if you build it they will come" mentality is so off the mark on this one as to be laughable...

If you build the Interconnect, people will come. They need to build it, with a lift terminating further down the access road and more parking. This will drive visits and make the village viable.