Following state permit struggles, an unseasonably warm winter in 2015, and seeking tax relief from the city, the Wilmington, Vt., property is focusing on “right-sizing our debt and equity structure” as it moves forward with a master plan that includes 93 additional units.
With state permit struggles and the unseasonably warm winter of 2015 behind The Hermitage Club in Wilmington, Vt., its founder and president says the company is “building back momentum,” the Brattleboro (Vt.) Reformer reported.
“I thought it would be better for everybody to just hear all the facts instead of some of the rumors that seem to happen if I’m not in the room,” said Jim Barnes.
Referring to tax payment plans, board members had previously said the town had been “played” by the club—as the installments being paid will not add up to the total owed. But Barnes said The Hermitage Club would not have asked for tax relief if it was not necessary, the Reformer reported.
“I can tell you, we needed help and it was tough to get through the last couple of months, but we’re getting through,” he told the board. “I’ll point out that the heavy lifting has occurred. We put a lot of money into this. We put a lot of energy. I’d say the next half of the decade is the time to accelerate and execute this business model.”
The latest focus is on “right-sizing our debt and equity structure,” Barnes said. That’s expected to help with securing insurance as the company continues forward with its plans. The master plan, necessary for resorts to have in Vermont, was approved in the state’s Act 250 permit process, the Reformer reported.
“Recently, we had some real estate sales that helped us,” Barnes said. “Most particularly, we had a $2.6 million sale covering five lots in Stag’s Leap area, which really helped us to start to catch up on some of our older payables.”
The Hermitage Club expects to pull in another $2.5 million in real estate sales in September. With permits secured, construction has begun on some properties. The hope is to get permits for 93 more units, Barnes said, or over $110 million of real estate. Those lots have already been approved for water and sewer connections, the Reformer reported.
Potential members of the club are being given tours during what the club calls “celebration weekends.” Memberships include access to the private ski resort at Haystack Mountain and a golf course. Current members are being offered chances to invest in the club, the Reformer reported.
“To get in the Equity Club, they’ve raised about $22 million,” Barnes said. “So we’re asking for these members to actually convert it into equity as part of this. We’re also seeking to raise an additional $15 million in equity through this rights offering. That will get us a debt package of about $60 million, which is really all we need to complete the project in its entirety. Because we get to recycle that money. It’s a line of credit we can continue to tap into.”
The governance structure has changed. Hermitage now has a board of eight directors. Barnes is the majority owner and the club has 664 members. In addition to the tax payment plans for properties in Wilmington, the company has been working to pay back vendors, the Reformer reported.
“It hasn’t been easy and we have been eating away at an old problem,” Barnes said. “Every day we eat away at that pile. But it is getting better.”
The Hermitage Club recently hired people for several “key” new positions, he said. The list included managing director of hospitality, chief legal counsel, managing broker of Hermitage Club Deerfield Valley Real Estate, and senior director of marketing, advertising and public relations, the Reformer reported.
“Since day one, the majority funding has occurred by my family,” Barnes said. “That’s me, when I say my family. That’s $70 million invested over a course of five years. In addition, the members have invested $22.8 million in that convertible debt I just referenced. They also invested $3.6 million in secondary memberships. We encourage them to buy a second one maybe for their second kid or their third kid.”
Barnes described club members as “dedicated to this project.” The number of them “has created a pent-up demand for on-mountain housing,” he said. The Hermitage also plans to expand its offerings around special corporate events, the Reformer reported.
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