Montana Resort Facing Bank Foreclosure List

by on Foreclosure Crisis

Moonlight Basin, a five-year-old ski and golf resort located near Big Sky in Montana, is facing a bleak future as it continues to struggle financially, burdened with massive debts. The real estate market collapse has severely affected the resort which is now facing the danger of being placed on bank foreclosure list by its major lender, Lehman Bros.

Lee Poole, owner and founder of the real estate development, sent a letter to owners of the resort property informing them that Lehman has decided to pursue foreclosure proceedings against Moonlight Basin. Lehman is required to submit a foreclosure notice to the Madison County Court in order for the process to begin.

In his letter, Poole stated that Lehman intends to continue the resort’s winter and summer operations. Lehman has filed bankruptcy but still continues with its operations.

In 2007, Moonlight Basin took out a $170 million loan from Lehman Bros. It used the money to buy out two partners of Poole in the real estate development and to continue the construction project in the property. Due to dwindling real estate sales, Moonlight Basin experience a severe cash drought at the same time that Lehman collapse.

Last winter, Moonlight Basin opened for ski operations and completed the Jack Nicklaus-designed nine-hole golf course. However, there were indications that Moonlight Basin’s operation is in great jeopardy without sales or a major cash investment.

The current financial predicament of Moonlight Basin mirrored the troubles experience by other high-end resorts, including the defunct Tamarack in Idaho and the Yellowstone Club which just emerged from bankruptcy. For the past 18 months, the real estate market collapse has pummeled the market for high-end vacation properties with no signs of revival in the offing.

The Moonlight Basin started its operation in 2004 with a conservation-minded development approach. The business model of the operation hinged on real estate sales, thus hundreds of condominiums and houses were constructed. The ski resort completed the construction of its restaurant, main lodge and ski lifts but many structures are still on the drawing board.

In a foreclosure proceeding, Lehman, as the major lender, will take possession of the ski resort in lieu of loan payment, As the new property owner, Lehman could hire an outside company to operate the resort’s recreation activities or it could choose to partner with nearby Big Sky Resort to operate the ski business. Lehman has started investing at several projects in Moonlight Basin in preparation for the winter and summer operations.