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Mountain News: Measuring the decline

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SNOWMASS VILLAGE, Colo. – Stalled development projects, lagging real estate sales, and brows furrowed over the coming ski season continue to dominate the news in ski towns.

Double-digit gains in real estate have been replaced by declines that are just as unrelentingly in double digits. A new Land Title Guarantee Co. report says sales volume was down 36 per cent for the year through September in Aspen and surrounding Pitkin County, while dollar volume plunged 46 per cent.

Construction activity is also being affected by the credit constriction. In Snowmass Village, real estate developer Related WestPac has announced that shaky credit has delayed three buildings scheduled for construction this fall at the $1 billion Base Village project. However, work will continue on two buildings now under construction.

Financing WestPac’s projects are Hypo Real Estate Holding, which recently received a $69 billion bailout from the German government, and Lehman Bros., the U.S. firm that filed for bankruptcy protection in September.

Lehman Bros., the nation’s fourth-largest investment bank, was also in the news in Telluride, where it was the financier of the swank Capella Telluride Hotel. The division of Lehman responsible for the financing was acquired in September by Barclays, the London-based global financial services company.

However, moving into October, Barclays had not confirmed that it would extend financing of the hotel. As the general contractor jockeyed to ensure payments, subcontractors began pulling out. The result, reports the Telluride Watch, was silence at a work site that before had been a cacophony of construction.

The construction trades returned to the project after about a week, when the financing extension was confirmed. The hotel, the first North American operation by Horst Schulze, who previously founded the Ritz-Carlton chain, is scheduled to open in February.

Lehman Bros. was also involved in financing the Fortress Investment Group acquisition of Intrawest, the operator of three major resorts in Colorado plus Whistler-Blackcomb. A $1.7 billion loan due Oct. 23 was causing apprehension, but the refinancing was accomplished.

Jackson Turner, an analyst with Argus Research, told newspapers that the debt costs had undoubtedly increased. The result, he suggested, will be reduced service and restricted capital investments at Intrawest’s various ski areas.

Intrawest spokesman Ian Galbraith brushed aside that idea, reports the Steamboat Pilot & Today. Chris Diamond, president of the Steamboat ski operation, one of the three ski areas in Colorado operated by Intrawest, dismissed Turner’s comments as “nothing more than outside speculation.”

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