Business Wire is reporting that CNL has sold off their LifeStyle Properties division including several Ski Resorts, Water Parks, and Amusement Parks, including Darien Lake, Elitch Gardens, Frontier City, four Wet'n'Wild parks, and many others. The all but one of the Ski Resorts have been sold to properties have been sold to EPR Properties with the amusement and waterparks being sold to Och-Ziff Real Estate, a New York City-based hedge fund.
If you are not aware, CNL Financial Group specializes in Real Estate Investment Trusts (REIT) and are alternative investment vehicles for people that want to invest in something other than the stock market. These companies buy up properties and put a little bit of money into them then sells them off so that their investors make profits. CNL owns several REITs including LifeStyle Properties, Healthcare Properties and much more.
An easier to digest version of the story is available here.
Some disclosure here, I worked for a Wealth Management Group for a little over a year and actually dealt with some of the firm’s clients that bought shares of CNL LifeStyle Properties so I am going to be mixing some facts with some of my own opinions. REITs always sell off their properties, they never own them for very long and they don’t invest a lot into their properties. They put just enough capital into a property to make it profitable for their investors then they sell them off. CNL bought these parks when SixFlags went through bankruptcy and began selling off property to stay afloat. It’s been known for almost two years now that CNL was looking to sell off the LifeStyle Properties (read amusement parks) and it appears they have found a buyer and are wrapping up that deal. When I first heard about the sale two years ago I was hoping that another company that is actually interested in operating theme parks would buy them and put enough capital into the parks to make theme worthy destinations. I am really disappointed that the parks are going to a Hedge Fund.
When CNL first picked-up these properties from SixFlags they contracted out operations to Herschend Family Entertainment, and as all of you know, they own Silver Dollar City, Dollywood, and Wild Adventures. Since CNL’s takeover of these parks, they have only ever added water slides and small flat rides. Herschend Family Entertainment, the operators at the time, have a reputation for quality and great theming, so it comes as no surprise that when Herschend wanted to put a lot of money into the parks, including the massive RMC project Lake Monster at Darien Lake, that the operations contracts between Herschend and CNL started to quickly end. The parks’ operations slowly began to transfer over to Premier Parks. Premier Parks should be familiar here as they own and operate Ocean Breeze in Virginia Beach.
Now, I don't really know anything about Hedge Funds because they aren't publicly sold investments, but I don't think it is a positive thing for these parks. I assume Premier Parks will continue to keep the operating contract on these parks for the time being, but I don’t expect much improvement at these parks going forward. Anyone that was hoping these properties would see vast improvements or additions should probably lower their expectations.
From what I can gather Hedge Funds operate similarly to Private Equity Firms like Blackstone so these parks futures are pretty murky in my opinion. I'd definitely keep an eye on them and visit soon if you still need credits from these parks.
Updated: Corrected buyer from EPR Properties REIT to Och-Ziff Real Estate.
If you are not aware, CNL Financial Group specializes in Real Estate Investment Trusts (REIT) and are alternative investment vehicles for people that want to invest in something other than the stock market. These companies buy up properties and put a little bit of money into them then sells them off so that their investors make profits. CNL owns several REITs including LifeStyle Properties, Healthcare Properties and much more.
An easier to digest version of the story is available here.
Some disclosure here, I worked for a Wealth Management Group for a little over a year and actually dealt with some of the firm’s clients that bought shares of CNL LifeStyle Properties so I am going to be mixing some facts with some of my own opinions. REITs always sell off their properties, they never own them for very long and they don’t invest a lot into their properties. They put just enough capital into a property to make it profitable for their investors then they sell them off. CNL bought these parks when SixFlags went through bankruptcy and began selling off property to stay afloat. It’s been known for almost two years now that CNL was looking to sell off the LifeStyle Properties (read amusement parks) and it appears they have found a buyer and are wrapping up that deal. When I first heard about the sale two years ago I was hoping that another company that is actually interested in operating theme parks would buy them and put enough capital into the parks to make theme worthy destinations. I am really disappointed that the parks are going to a Hedge Fund.
When CNL first picked-up these properties from SixFlags they contracted out operations to Herschend Family Entertainment, and as all of you know, they own Silver Dollar City, Dollywood, and Wild Adventures. Since CNL’s takeover of these parks, they have only ever added water slides and small flat rides. Herschend Family Entertainment, the operators at the time, have a reputation for quality and great theming, so it comes as no surprise that when Herschend wanted to put a lot of money into the parks, including the massive RMC project Lake Monster at Darien Lake, that the operations contracts between Herschend and CNL started to quickly end. The parks’ operations slowly began to transfer over to Premier Parks. Premier Parks should be familiar here as they own and operate Ocean Breeze in Virginia Beach.
Now, I don't really know anything about Hedge Funds because they aren't publicly sold investments, but I don't think it is a positive thing for these parks. I assume Premier Parks will continue to keep the operating contract on these parks for the time being, but I don’t expect much improvement at these parks going forward. Anyone that was hoping these properties would see vast improvements or additions should probably lower their expectations.
From what I can gather Hedge Funds operate similarly to Private Equity Firms like Blackstone so these parks futures are pretty murky in my opinion. I'd definitely keep an eye on them and visit soon if you still need credits from these parks.
Updated: Corrected buyer from EPR Properties REIT to Och-Ziff Real Estate.
