Completion of sale to state likely just weeks away – Loveland Reporter-Herald

ESTES PARK — A complex deal to sell the privately held Stanley Hotel to a state-owned company, months in the making and intended to help raise Colorado’s profile as a player in the global entertainment industry, is nearing completion.

“I think we’ll probably close in the next six to eight weeks,” John Cullen, whose company Grand Heritage Hotel Group has owned the iconic Estes Park lodge for decades, told members of the Colorado Economic Development Commission Thursday morning. “The market is right, the market timing is right, the bond rates are in the right place.”

The 116-year-old, 140-room Stanley Hotel served as the inspiration for Stephen King’s novel The Shining, which was adapted for the screen by director Stanley Kubrick and is widely considered one of the best contributions to the horror film genre of all time.

In late May, Colorado state lawmakers passed House Bill 1295, which promotes incentives for the revitalization of the creative industry community, paving the way for the Colorado Educational and Cultural Facilities Authority to purchase the Stanley Hotel from Grand Heritage and facilitate the completion of a long-dormant film center at the hotel.

Once completed, the Stanley Film Center will be “a two-story building with an area of ​​approximately 64,735 square meters, which includes an open-air amphitheater with approximately 864 seats and a fire capacity of 1,200 (including standing room), an event center, a film museum, a recording studio and related facilities. It will be built adjacent to the main hotel building and connected to the concert hall,” a state document said.

Blumhouse Productions LLC, the all-powerful production company behind horror films and franchises such as “Get Out,” “Five Nights at Freddy’s,” “The Purge” and “Paranormal Activity,” will be the film center’s exclusive exhibition curator.

During a recent visit by employees of Blumhouse and its parent companies NBCUniversal Media LLC and Comcast Corp. (Nasdaq: CMCSA), the parties agreed to a deal that will allow the Stanley to host four film festivals over the next year – each showcasing a new film.

“None of this would have happened here in Estes Park without this deal to sell the property,” Cullen said.

At the upcoming film festivals, hotel rooms are expected to be sold out on 16 to 20 evenings, “which is extremely lucrative, especially in bad weather,” he said.

Once the planned modernization measures are completed, the Stanley will become “one of the great cultural capitals of Colorado, if not more.”

The Stanley’s management is part of a regional initiative to bring the Sundance Film Festival to nearby Boulder. Boulder was selected last month as one of six finalist cities to host the world-famous event for a decade starting in 2027. If Boulder is selected, the Stanley and its film center will likely host some Sundance events during festival week.

Representatives of the Colorado Office of Economic Development and International Trade have joined Cullen – whose company is expected to continue operating the hotel after the state takes over – in repeatedly stressing that a sale of the Stanley is necessary to fund important improvements such as the completion of the Stanley Film Center.

“It is undoubtedly a complex transaction, but it is already beginning to pay off,” Cullen said of the plan to sell the hotel to CECFA, which, according to its website, is “the official government issuer of tax-exempt bonds for capital projects that further the goals of educational and cultural organizations.”

Arizona-based Community Finance Corp., a nonprofit business group specializing in forming public-private partnerships that provide alternatives to the traditional financing programs governments often use to fund capital improvements and infrastructure projects, was previously close to purchasing the Stanley building from Grand Heritage through a complex financing mechanism, namely through the issuance of a $475 million bond through CECFA.

That deal apparently fell through this spring—the parties involved have remained tight-lipped about the circumstances—and a new (and still quite byzantine) contractual structure was created that allows CECFA to act as both the bond issuer and the short-term owner of the Stanley.

This new deal is a “really complicated transaction with many parties and stakeholders,” said Jeff Kraft, deputy director of OEDIT. “If this transaction works, there will be tremendous long-term benefits for the public because the hotel will ultimately be publicly owned. We are very excited about that.”

If the Colorado Educational and Cultural Facilities Authority’s plan works, the Stanley will belong to the state after the bonds – which are still expected to total more than $400 million – are paid off, and the proceeds from the property sale will go back into the CECFA’s coffers.

The bond issuance and sale of the Stanley property to the state “is intended to provide funding for the state sales tax increase of up to $46,399,582 over 30 years approved by the EDC under the Regional Tourism Act” to help get the Stanley improvement projects across the finish line, an OEDIT spokesperson told BizWest in an April email.

The passage and signing of HB 1295 in May allowed CECFA to expand its operational mandate to include certain new functions it would assume as owner of the Stanley.

“Even though that wasn’t the original plan, it turned out pretty well,” Cullen said of his company’s transition to a new mechanism for offloading the Stanley property.

Although the sale is nearing completion, certain details are still unclear. Neither Grand Heritage nor the state have commented on why the deal with Community Finance Corp. fell through or what financial benefit Cullen and his company will gain from the transaction.

“We are very close to closing the transaction, but there are some reasons to keep some details confidential for securities law reasons,” Kraft said. “But I think more news is imminent and I feel like (OEDIT) will be kept fully updated on what is happening with the transaction.”

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Originally published: August 15, 2024 at 18:30