Private equity is always looking for that major return on investment. The latest play: ski resorts. Large real estate holdings, a dedicated user base and free cash flow – all equal great opportunities for buyout firms. The latest potential target is Vail Resorts of Colorado. It hit an all-time high today of $45.66, closing up $1.68, or 3.8% – on talk of a buyout.
Chris Woronka – an analyst on Deutsche Bank – broke down the advantage of buying ski resorts into three key factors:
* that stable and attractive free cash flow
* a continued leisure demand, especially with the aging of baby boomers
* and real estate development opportunities.
Dan Primack – the editor of Private Equity Week and PEHub.com – says that PE firms like the hard assets that come with ski resorts and the built-in base. There are some seasonal and risk concerns – but PE firms figure those into the price.
Why buy real estate in the midst of a slowdown? Primack said these aren’t your typical properties. They’re limited in number, and they’re prime locations.
Next to casinos and hotels--ski resorts are shaping up to be a key PE target.