Adam’s Rib properties sale slated this week | VailDaily.com
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Adam’s Rib properties sale slated this week

BIZ Adam's Rib Ranch 1 DT 6-20-08
Enterprise file photo |

For more than four decades, Fred Kummer of the HBE Corporation in Saint Louis has been a major landowner in the Brush Creek valley.

That may change this week.

A Denver-base limited liability company called Brue Capital Partners signed a purchase and sale agreement on Nov. 21, 2014 for Kummer’s Brush Creek holdings including the Adam’s Rib Ranch property and the Adam’s Mountain Country Club. The agreement calls for an acquisition price in the $20 million to $30 million range with a closing scheduled for this week.

According to a January 2015 executive summary-debt offering publication from Brue Capital, “The property consists of 2,655 total acres of land consisting of an 18-hole championship golf course, 40,000 square foot clubhouse with pool, tennis court and sport court, 16,000 square foot golf maintenance facility, five newer construction speculative homes ranging from 2,838 to 6,405 square feet, five member cottages at 2,260 square feet each, 91 finished residential lots ranging from 3.6 to 9.9 acres each with all the necessary infrastructure for immediate development and

a fully operational 1,553 acre ranch which includes future development rights for up to 114 additional residential units.”

PROPERTY HISTORY

Since the 1970s, the fate of the Brush Creek Valley has been largely dependent upon Kummer. As the Brue Capital publication notes “In 1960 Fred Kummer founded HBE Corporation, a leading design-build firm based in St. Louis, Missouri. HBE has been involved in the planning, design and construction of more than 1,000 hospitals across the US. The company also owned and operated the Adam’s Mark hotel chain until eventually selling off each of the 20 hotels in the chain from 2004 to 2010.

“Beginning in 1973, Mr. Kummer began acquiring ranch land in the Brush Creek Valley and more than 40 years later has acquired an impressive and spectacular assemblage of privately owned land surrounded by state and federally owned land (Bureau of Land Management, Colorado State Parks, U.S. Forest Service, and conservation easements).”

Back in the 1970s, Kummer envisioned development of the Adam’s Rib Recreation area, which would include a ski resort on Adam Mountain and a ski village in Vassar Meadow.

“In total, Mr. Kummer spent in excess of $30 million to acquire the land and began the process of developing another Colorado mega resort,” states the Brue Capital summary. “After multiple failed attempts to garner approval to build a ski resort on the nearby Adam Mountain in the 80’s and 90’s, Mr. Kummer turned his focus towards the development of a golf course community.

“In 2005, Mr. Kummer started construction on an 18-hole championship golf course and surrounding residential development. After spending over $70 million on the golf course, amenities, and residential infrastructure completed in 2007-2008, the great recession hit causing a complete drop off in the second homebuyer pool. Now, seven years later, HBE Corporation has decided to liquidate the entire assemblage.”

SUBSTANTIAL DISCOUNT

In the preparation of due diligence related to the proposed acquisition, Brue Capital stated it has teamed with “top firms in the Denver Metro and Vail Valley” to prepare property valuations and perform overall market feasibility studies. The result of this work has led the company to conclude that it can acquire the property at a substantial discount.

“The current owner has invested over $100 million into the property since the 70’s and has simply overpriced every aspect of the project for today’s market conditions. With an acquisition price at cents on the dollar of the current owner’s invested capital, BCP will be able to take advantage of a reduced basis allowing for a reduction of pricing across the board (residential lots, golf membership, and ranchland) in order to realize attractive returns to its equity investors as well as downside protection for a lender.”

Brue Capital believes there will be considerable flexibility regarding the future development of the the Adam’s Rib holdings. Because of the size and nature of the property, the summary noted that certain portions of the land could be sold to help finance development in other areas.

“As we explore each of the available options for each component of the property, the overall strategy will remain fluid as we sell portions of the property. It is not the intent of BCP to go vertical with any new construction at this time; however it is possible that BCP could engage local area custom home builders to begin speculative construction on a few of the residential lots, at their risk.”

GOLF COURSE OPERATIONS

The company does not plan to sell the golf course, noting “it is critical to the sale of the lots to maintain full control of the golf course and its amenities as an attraction to residential lot buyers.” However, the company noted the club currently operates at substantial annual loss. If the acquisition is successful, the new owners have indicated they want to substantially increase membership at the golf club. The report suggests reducing both the initiation and annual fees for members.


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