Mammoth Mountain Ski Area signed an agreement to sell a majority interest to an affiliate of Starwood Capital Group Global, L.L.C., valuing the company at $365 million. Rusty Gregory will retain his position as Chairman and CEO of Mammoth Mountain, and will continue to own a substantial stake in the company. Intrawest Corporation will also maintain a minority investment. Starwood Capital also announced it has entered into a preliminary agreement with Intrawest to form a joint venture to recapitalize and develop the majority of Intrawest's real estate holdings in and around the Mammoth Lakes region, which includes over 1,000 residential and lodging units and approximately 30,000 square feet of commercial space.
The relationship between Mammoth Mountain and Starwood Capital reinforces the company's vision and strategy to become a major destination resort. “With their background in hotel and resort development, the Partners at Starwood Capital bring an understanding of our business environment as well as knowledge of the true potential of our resort,” said Mr. Gregory. “They are making an investment in us for the brand we have developed to-date, but they also see us poised as the next major destination resort in North America — that was an important factor in our selection of Starwood to buy the company.”
Dave McCoy, founder of Mammoth Mountain, said, “It's my expectation that Starwood Capital will continue our original vision for developing a world-class mountain community. There were many people interested in Mammoth, but cultural fit and dedication to maintaining a quality community was very important to me.” The leadership of the company will remain intact along with the key components that have been a part of Mammoth Mountain's success such as financial discipline and operational excellence. Mammoth Mountain will continue its long-standing partnership with the community to achieve common resort goals.
Starwood Capital is led by Barry Sternlicht, who for nearly 10 years until May of this year served as Chairman of Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) (“Starwood Hotels”) and was CEO of Starwood Hotels until October of 2004. Under Mr. Sternlicht's leadership, Starwood Hotels grew from an $8 million enterprise into a company enjoying a market value in excess of $12.5 billion today. Mr. Sternlicht created both the “W” and the St. Regis brands and introduced the Heavenly line of products into Westin Hotels. He has been an innovator in creating brand identity and brand value in the hospitality business. Through Starwood Capital he has also been one of the leading real estate private equity investors focused on creating and growing real estate related business enterprises. “We are excited about the opportunity to work with Mammoth on their transformation into a world-class resort destination with a real estate component to match one of the continent's finest mountains,” said Mr. Sternlicht.
“Mammoth Mountain provides a wonderful opportunity to take a well managed company to the next level. The mountain is one of North America's top physical resort assets from a terrain, average snowfall and beauty aspect, and our investment comes on the heels of $150 million of capital investment in the mountain over the past ten years,” said Marc Perrin, Managing Director of Starwood Capital. “We have a proven track record of building brands and growing businesses such as Mammoth into industry leading companies.”
A secondary strategic outcome of this deal is the preliminary agreement between Starwood and Intrawest for Starwood to recapitalize, in a joint venture, Intrawest's real estate investments in Mammoth. Starwood will become the single entity responsible for most of the key real estate development in and around the Mammoth Lakes region. This creates a single point of influence on the bed-base development and amenities that are crucial to developing a destination resort.
Houlihan Lokey Howard & Zukin, an international investment bank, served as exclusive financial advisor to Mammoth Mountain, running a competitive auction process and structuring and negotiating the transaction. Houlihan Lokey has maintained over a 15-year relationship with Mammoth and its shareholders. The transaction is expected to close within 90 days pending the customary closing conditions.
