One of the calamities of the economic downturn – the loss of resort properties when their values fell hard and owners could not pay off loans. They lost millions and some have now filed suit against Credit Suisse, the same company that lent money for the purchase of Mammoth Mountain Ski Area and real estate around the Village. Mammoth Mountain is not involved in the big class action suit against Credit Suisse.
A resort near Yellowstone and Utah did file suit, along with many others. They claim Credit Suisse conspired to inflate the value of properties so they could take them over.
MMSA CEO Rusty Gregory said that the resorts that sued Credit Suisse “borrowed too much and their risk didn’t work out.” Gregory said, “One of the manifestations of an up market – when the music stops, the ones without chairs complain.”
Gregory explained that Credit Suisse provided the money for two deals to Barry Sternlicht, Starwood, Intrawest, Gregory and others – one, the purchase of MMSA and two, the undeveloped real estate around the Village and Sierra Star including the Village parking lot and Berger’s property.
Gregory said after borrowing $110 million, the value of the land dropped so dramatically it didn’t make sense to continue with the deal. They gave the land to Credit Suisse, known as a deed in lieu of foreclosure. “We’re not blaming the lender,” said Gregory. “It’s the luck of the draw.”
Now, the Mammoth interests are focused on the Ski Area and Air Service. “We have the same long-term interest in Mammoth as a destination resort,” said Gregory.
While the financial seas remain rough, Gregory said that the demand at the Mountain is now significantly stronger than last year.