Another
well-known Central Oregon distressed business is preparing for sale as it works
through bankruptcy for the second time since 2011, a situation similar to the
region’s only daily newspaper and its parent company.
The
family-held limited liability companies that control Aspen Lakes Golf Course and
other properties have received federal bankruptcy court approval to auction the
course and related facilities as well as other adjacent land that has been
promoted for a destination resort several miles east of Sisters. https://www.aspenlakes.com/
The
recent approval comes after the LLCs--controlled by the Cyrus family-- filed
for Chapter 11 bankruptcy in June of 2018, a move that gives troubled
businesses temporary protection from creditors and a chance to reorganize debt and
operations. Also in Chapter 11 proceedings for the second time since 2011 is Western Communications, parent of the Bend Bulletin and six sister publications.
The
Aspen Lakes bankruptcy filing followed foreclosure action by the companies’ largest secured
creditor, GT Capital of Sioux Falls, SD, which took over a $3.5 million originally issued in 2006 and
held by Spokane-based lender AmericaWestBank, a successor to PremierWestBank. GT
Capital, which also holds a $427,000 loan to a Cyrus family LLC, became the lender of record in 2014 and filed
the forclosure in April, about two months before the bankruptcy filing by the
Cyrus companies.
Among
defendants in the foreclosure are Wildhorse Meadows, LLC; Aspen Lakes Golf
Course, LLC; construction and utility LLCs related to the Cyrus family
interests: and various individual members of the family.
As
of the June 2018 Chapter 11 filing date, the Aspen Lakes LLC reported total
assets of $1,123,315 and liabilities of $6,971,501. Of the liabilities, $4,901,141
was to GT Captial, secured by the golf course. John Deere Financial service
also held a $5,125 interest.
Other
creditors included those with “priority” unsecured claims of about $80,000 and
$1,985,849.. Of the unsecured nonpriority claims was $1,356,680
from Wildhorse Meadows LLC. The IRS was listed
as a priority unsecured creditor, with claims of about $58,000 in June of 2018,
but no tax lien against assets had been filed by mid-March of 2019.
A
New York auction broker, Keen-Summit Capital Partners, working with golf
brokers Fairway Advisors, have announced a planned auction deadline of May 28 for
bids on the golf course and other related properties.The auction is set for June 4.
Among
the properties are the 18-hole golf course, clubhouse and other property on approximately
390 acres; a 340 acre parcel with potential destination resort
development; and other smaller properties including one of nearly 120 acres zoned
for a surface mining operation.
The
golf course and related property include the course, opened in 2007, and a
35,000 square foot building housing a 300 seat restaurant, offices and meeting
or event space with capacity for 500 attendees.
The
auction announcement includes a note that a “stalking horse” bid would be
welcome. In that situation the seller could accept a bid before the auction
deadline, which would then theoretically set a minium price and conditions for
any other bids.
If
the seller accepts another higher bid, or one with more favorable conditions, the
stalking horse buyer is entitled to compensation in the form of a breakup fee and
a percentage of its early bid price.
Detailed
information regarding the auction pricing and conditions is only available for interested
parties who sign a nondisclosure agreement.
Valuing golf courses can be complex. One back-of-the-napkin approach is to assign a per hole price assuming quality, location and other factors. Another method involves computing the replacement cost, by imputing a land value then estimating cost to build a comparable course and facilities.
A third method, the income approach, computes the value based on net income and a capitalization rate, such as 7%. For example if a course netted $200,000 in an average of maybe three previous years, the value might be placed at $2.857 million.
Valuing golf courses can be complex. One back-of-the-napkin approach is to assign a per hole price assuming quality, location and other factors. Another method involves computing the replacement cost, by imputing a land value then estimating cost to build a comparable course and facilities.
A third method, the income approach, computes the value based on net income and a capitalization rate, such as 7%. For example if a course netted $200,000 in an average of maybe three previous years, the value might be placed at $2.857 million.
The
most prominent recent sale of a regional golf course property was in 2018, when
Tampa, FL based investor Kiran Patel paid a price recorded at $12 million for Eagle
Crest Resort. That sale included two 18-hole golf courses, lodging and
restaurant facilities and about 80 development lots.
Several
years earlier a LLC related to the Suniver Resort and Crosswater golf
communities paid a recorded $7.25 million for approximately 600 acres south of
the existing Caldera Springs golf resort, a Sunriver holding. That land south
of Vandevert Road has access to Caldera’s existing waste treatment and other
infrastructure and is anticipated for expansion to include nearly 500 homes and
lodging units.
In
the Seattle area a golf property developed by the late Microsoft co-founder
Paul Allen with two 18-hole and a 9-hole family course and two clubhouses sold
in 2019 for a reported $11.3 million.
