Vail Resorts today announced that the Company has entered into a long-term lease with affiliate companies of Talisker Corporation for Canyons Resort in Park City, Utah. Under the lease, Vail Resorts has assumed all of the resort operations of Canyons while Talisker has retained its development rights for four million square feet of real estate at the resort.
"With 4,000 skiable acres, easy access to the town of Park City and $75 million in recent resort improvements, Canyons is a perfect complement to our collection of world-class mountain resorts", said Rob Katz, chairman and chief executive officer of Vail Resorts. "I commend the Talisker and Canyons team for the outstanding work they have done to redevelop the resort, which is reflected in a top 10 ranking by SKI Magazine and #4 ranking by Outside Magazine. We look forward to building on that momentum and including Canyons in our industry-leading season pass products, which next season will offer guests access to Colorado, Tahoe and Utah on one season pass, a first in ski industry history. We will also leverage our guest database and domestic and international sales and marketing efforts to continue to drive Canyons’ growth. Talisker has an outstanding track record of high-end resort development and we look forward to working together to create something truly extraordinary with Talisker’s four million square feet of remaining approved residential and commercial density at Canyons".
The transaction also incorporates the potential for the lease, without additional consideration, to include the land under the ski terrain of Park City Mountain Resort that is adjacent to Canyons and is currently owned by Talisker and is subject to pending litigation. "We look forward to the litigation being resolved and hope that Vail Resorts can play a constructive role in helping to arrive at a solution that offers the best outcome for guests of both resorts", Katz added.
"We are thrilled to be able to bring in Vail Resorts to partner with us on our vision for Canyons", said Jack Bistricer, chief executive officer of Talisker. "Vail Resorts is the clear leader in the mountain resort industry and I am confident that they can replicate at Canyons the success they have delivered at resorts such as Vail, Beaver Creek, Breckenridge and Northstar. I am incredibly proud of all that our team has accomplished at Canyons over the past five years and am confident that together with Vail Resorts, we can create one of the greatest mountain resorts in the world".
The Company also announced that purchasers of the Epic Pass for the 2013-2014 winter season will receive unlimited and unrestricted access to Canyons, as well as to Vail, Beaver Creek, Breckenridge, Keystone, Northstar, Heavenly and Kirkwood. The 2013-2014 Epic Pass is on sale now at $689 for adults, compared to the season pass price of $849 at Canyons this past year.
The lease has an initial term of 50 years with six 50-year renewal options. The lease provides for $25 million in annual fixed payments, which increase each year by an inflation linked index of CPI less one percent, with a floor of two percent per annum. In addition, the lease includes participating contingent payments to Talisker of 42 percent of the amount by which EBITDA for the resort operations, as calculated under the lease, exceeds approximately $35 million, with such threshold amount increased by an inflation linked index and a 10-percent adjustment for any capital improvements or investments made under the lease by Vail Resorts. The Company will be finalizing the accounting for the lease in the coming months but expects to record an obligation on the balance sheet of approximately $305 million in long-term debt (including capital lease obligations). The Company expects incremental annual Resort EBITDA from Canyons of approximately $15 million in fiscal year 2014 (excluding transition and integration costs) increasing to approximately $25 million in fiscal year 2017, not including any potential benefit the Company may receive from the Park City Mountain Resort land which is subject to ongoing litigation.
The Epic Pass provides unlimited skiing or riding, at $689 for adults and $359 for children (ages 5-12), at nine resorts including Vail, Beaver Creek, Breckenridge, Keystone, Arapahoe Basin and now Eldora in Colorado and Heavenly, Northstar and Kirkwood in Lake Tahoe. New this year, the Epic Pass also comes with five free days of skiing or riding at the renowned Verbier Resort in Switzerland and an additional five free days of skiing and riding in Arlberg, Austria. No restrictions. At this spring rate, the Epic Pass pays for itself in just over five days.
Vail Resorts is the leading mountain resort operator in the United States. The Company's subsidiaries operate the mountain resorts of Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Afton Alps in Minnesota and Mt. Brighton in Michigan; and the Grand Teton Lodge Company in Jackson Hole, Wyoming. The Company's subsidiary, RockResorts, a luxury resort hotel company, manages casually elegant properties. Vail Resorts Development Company is the real estate planning, development and construction subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN).