The Yellowstone Club is located in Big Sky, Montana. Behind one of the doors in the club's main building (there are really many) hides a spacious lounge with comfortable chairs, a variety of snacks and cold drinks, and a 15-foot × 15-foot model of the club. The model showcases the club's private ski slopes, lush golf courses, and hundreds of numbered properties spread across its 15,000 acres — all of which play a role in selling memberships.
Sam Byrne, managing ·partner of CrossHarbor Capital, a Boston-based real estate investment firm, proudly lists what the team has added to the ski and golf grounds since buying the bankrupt club in 2009: a performing arts center that has hosted small concerts by rock stars like Sting and the Doobie Brothers; BaBa, an upscale restaurant helmed by Boston-based celebrity chef Ming Tsai; There are also nightclubs, luxury spas and more. "The things we do are unique." Byrne said proudly.
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No other ski resort town in the United States has such a strong investor as Big Sky.
In addition to its $115 million acquisition of the Yellowstone Club with partners 15 years ago, CrossHarbor made two acquisitions in 2013 to develop more luxury homes in the Big Sky area. It spent $26 million on the Spanish Peaks Mountain Club, a 5,700-acre ski and golf Spain community that also declared bankruptcy; It also spent $32 million to buy the Moonlight Basin, a ski resort and residential development that also went bankrupt and went to creditor Lehman Brothers Holdings.
Upon completion of the transaction, CrossHarbor sold the ski areas of Spain Peaks and Moonlight Basin to Boyne Resorts, the company that owns and operates Big Sky Ski Resorts. Boyne incorporated them into Big Sky Resort, making it one of the largest ski resorts in the United States with approximately 5,800 acres of skiable area.
Over the past 15 years, CrossHarbor has invested at least $4 billion in debt and equity financing into the Big Sky Project. The funds were used to acquire land in the Yellowstone Club, Spain Peaks, Moonlight Basin, and Big Sky Town Center, resulting in 43,000 acres of land, as well as to build homes, restaurants, two hotels and other facilities on the land, in addition to the purchase and construction of staff housing.
In 2022, CrossHarbor purchased 500 acres of land from the Simkins family in Bozeman. Matt Kidd, the company's partner and head of Lone Mountain Land Company, a Montana subsidiary, said the acquisition now houses more than half ·of the land in Big Sky's town center in CrossHarbor. Big Sky has thus become the largest overall project of the 31-year-old company. CrossHarbor is also investing in apartment buildings, office buildings, and retail centers across the United States. In its 2023 ESG report, the company said, "CrossHarbor is the most significant private owner in the (Southwest Montana) region, making up 75% of the local tax base." ”
CrossHarbor Capital's Matt · Kidd (left) and Sam · Byrne introduce the Doobie Brothers at a concert at the Yellowstone Club over Labor Day weekend. Image courtesy of Yellowstone Club
The tax money went to the town, which has only about 3,300 permanent residents. The town does not have a municipal body, so there is no mayor or city council. The majority of Big Sky is located in Gallatin County, Montana, but the Yellowstone Club is in neighboring Madison County. Aside from Big Sky Ski Resort, Lone Mountain has the most investment and stake in the town – making longtime Big Sky resident Kidd (who lives here with his wife and three children) an unofficial mayor in a sense.
"They couldn't have been better timed to catch a 15-year wave of development." Eric Ladd, who has worked in the Yellowstone Club'·s sales and membership team for 10 years, said. "At that time, we had almost 30 years of growth in less than a decade." In 2008, Ladd founded Outlaw Partners, a media, events and real estate company, in Big Sky, where he served as chairman.
Byrne, 59, got into the real estate industry as a teenager, getting a license at the age of 17 to help his mother sell a home at a real estate office near Marblehead, Massachusetts.
In 1993, he co-founded CrossHarbor Capital in Boston, focusing on commercial real estate private equity. Today, CrossHarbor manages $10.2 billion in assets and has offices in Chicago and Newport Beach, California. In 2020, CrossHarbor sold a minority stake to Dyal Capital Partners (now owned by Blue Owl), Sumitomo Mitsui Trust & Banking in Japan, and Singapore-based private equity firm Hillhouse Capital. The company's investors include about 300 families or family offices, some of which are members of the Yellowstone Club.
CrossHarbor is tight-lipped about its returns. Early supporters of the Yellowstone Club received a return on investment of about 4.5 times. "Of course, the Yellowstone Club is a financial success story," Kidd said. He joined CrossHarbor in 2008 to specialize in the Yellowstone Club and has managed the company's Montana operations ever since.
As for the company's other investments in Montana, he said, "These projects should be successful, and our investors will be rewarded for their patience and dedication." In addition, CrossHarbor has invested in apartment developments in Denver and Falls Church, Virginia, a 1 million-square-foot Amazon distribution center in Phoenix, and open-air retail complexes in Santa Rosa, California, and Cranston, Rhode Island.
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The Yellowstone Club was first founded by Tim Blixseth, an Oregon timber entrepreneur and former billionaire, ·.
He bought 140,000 acres near Yellowstone National Park in 1991 and exchanged it for land to build the club. In 1999, the club was officially established. In the early 2000s, skier Bourne first visited a friend's home at the Yellowstone Club and became a member of the club in 2005.
Two years later, CrossHarbor invested nearly $55 million to buy some of the club's land parcels and plans to spend another $455 million to buy the entire Yellowstone club. In the end, the deal didn't get through. It was later revealed that Brixes borrowed $375 million from Credit Suisse for club construction, but he privately spent more than $200 million on yachts and mansions to create a high-end timeshare project. However, the project never really developed.
Later, the Brixes divorced; As part of the divorce settlement, Brixeth's ex-wife, Edra, got the Yellowstone Club in June 2008. CrossHarbor offered Edra a $35 million bridging loan to keep the club running, but it simply wasn't enough. The club eventually failed to repay Credit Suisse's loan and filed for bankruptcy in November 2008. By this time, CrossHarbor had a good grasp of the club's finances, and it worked with about 40 club members to buy the Yellowstone Club out of bankruptcy for a low price of $115 million.
After CrossHarbor expanded its footprint in Big Sky, Bourne took a closer look at other resort towns. He observed that Jackson Hole, Wyoming, grew rapidly after the introduction of two high-end brands, Seasons Hotel and Amangani. As of 2013, Big Sky had a few hotels, but none of them were national.
"At that time, engineers and architects would still choose to drive an hour back to Bozeman after finishing their work to save Marriott points." Byrne noted. Lone Mountain begins development of the Wilson Hotel in the heart of town, a hotel managed by Marriott's Residence Inn, Big Sky's first four-star hotel, which opened in 2019. At the end of 2021, after nearly a decade of preparation and more than $700 million in investment, Lone Mountain launched the luxurious Montage Grand Sky Hotel. Located at the Spain Peaks Mountain Club and with ski access to Big Sky Resort, this elegant development is suitable for high-end independent travellers and luxury tour groups who can help fill their off-season vacancies. "The hotel here will maintain 100% occupancy from June 15 to mid-September. But in the shoulder season, you'll need to rely on groups of tourists to fill vacancies, so that you can finally run a successful five-star property – because of its high operating costs. Byrne explained.
Byrne still lives in the Boston area and travels to Big Sky several times a year. When Forbes went to interview in July, he happened to be in town to celebrate the 15th anniversary of CrossHarbor's purchase of the Yellowstone Club. The company held an investor dinner that night to celebrate their success.
During the pandemic, Montana's relatively relaxed restrictions and easy access to the outdoors attracted new residents to Sky, a corner of the state, and the town experienced a strong wave of growth. However, the current growth has slowed. Although it is still receiving a large number of requests to buy houses and apartments, Lone Mountain has started offering sweeteners such as furniture subsidies for home buyers. "It's actually a good time to buy property in Big Sky. You can get some deals from us, such offers were not possible before, and probably will not be available again in the near future. Kidd said. However, Lone Mountain has not lowered house prices.
CrossHarbor Capital's Montana subsidiary, Lone Mountain Land Company, now owns more than half of the land in Big Sky Town Center (pictured) and has developed a portion of it. Image courtesy of Lone Mountain Land Company
Compared to the extremely expensive and highly private Yellowstone Club (with a maximum membership of 914 members, a $500,000 deposit and a minimum of $10 million to purchase land or property, in addition to an annual fee of $78,000 and a $14,000 owner's association fee), buying property in Moonshine Basin and Spain Peak is relatively "affordable". The cheapest property in both locations is a $1.5 million studio apartment, but there is also a whopping $30 million luxury home with six bedrooms and 9,300 square feet. Membership fees of $150,000 and $200,000 respectively, with an annual fee of approximately $25,000, cover access to the clubhouse, restaurants, unlimited golf and other outdoor activities. (There are other lower-priced memberships available, but golf benefits are not available.) ）
While several other companies have gone bankrupt here, why has CrossHarbor not only survived, but even thrived? Kidd said it was excessive debt that brought down the former owners of the Yellowstone Club, Spain Peak and Moonlight Basin. "They are all different, but they all have one thing in common – too much debt. They need equity financing to withstand the challenges of time and economic circumstances, and should not rely on mortgaged land to finance or loans to buy land. Kidd explained. Lone Mountain does borrow money, but only for the construction of the project, not for the purchase of land. He said that the purchase of land in Big Sky at a low price had undoubtedly helped eliminate the need for borrowing.
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Like all resort towns, Big Sky faced a number of challenges, the biggest of which was a shortage of staff housing.
Lone Mountain said it has spent more than $200 million to build or acquire about 650 housing units in Big Sky and about 30 miles away in Gallatin Gateway. But 75 percent of Big Sky employees still live in surrounding counties and commute to work.
Regardless, Byrne and Kidd still plan to continue expanding. One of their most recent projects is the One&Only Moonlight Basin, which has been in the works for about a decade, and is located on the ridge of the Moonlight Basin community with views of Big Sky's iconic Longen Peak. One&Only is an ultra-luxury hotel chain founded by the late South Africa entrepreneur Sol Kerzner · owned by the Investment Corporation of Dubai, the government's main investment arm; Big Sky will be One&Only's first store in the United States. Lone Mountain partnered with Dubai Investment Corp., a minority shareholder, to invest $850 million in the project. The hotel's ski slope will open in December this year and will be connected to the Grand Sky Resort via a new gondola, which will be open next year.
Lone Mountain is also expanding further elsewhere in Montana. In 2021, it purchased the 18,000-acre Crazy Mountain Ranch, about an hour and a half drive from Big Sky, to build an additional club there, and fly fishing, horseback riding, and golf courses are currently under construction. The initial deposit to join the club is $1.5 million. On the big sky side, they expect to build another 200 to 400 houses in the Spain Peak and Moonlight Basin in the next 15 years. They also plan to open two more hotels, but have not disclosed specific details.
"It was clear to me that for Yellowstone to be better, there had to be some community-level infrastructure investment, so that the value of everything would increase," Byrne said. "We believe it's best for us to control the pace and how we get our products to market, and to be involved in all kinds of things. That's why we've basically acquired all of the projects we already have. ”
This article is translated from:
https://www.forbes.com/sites/kerryadolan/2024/10/13/the-private-equity-firm-betting-big-on-big-sky-montana/
文:Kerry A. Dolan Forbes
Translated by Lemin Guo
Forbes China exclusive manuscript, please do not reprint without permission
头图来源：NISHANTH RADHAKRISHNAN FOR FORBES ASIA