Sam Bryne, the founder of Boston-based CrossHarbor Capital Partners, has hit back at critics of his firm’s $100 million bid for the private Yellowstone Club, warning that the bankruptcy proceedings had descended into a “circus”.
Speaking to the local website, www.newwest.net, Bryne said CrossHarbor wanted to recapitalise the 13,500-acre club, located in the Montana Rockies, in an effort to help it survive the economic downturn.
CrossHarbor yesterday won bankruptcy court approval for its stalking horse bid. Yellowstone filed for bankruptcy last year following the real estate downturn and the divorce of founders Tim and Edra Blixseth.
However, some members are reportedly angry over the low bid, particularly following a failed bid by CrossHarbor last year. At that time, the real estate investment firm bid around $470 million.
A report in the Wall Street Journal at the weekend said some members were battling over the way a $375 million loan from Credit Suisse was used by the founders Tim and Edra Blixseths. The report said much of the loan proceeds were used on a failed global expansion and other personal investments and expenses, leaving Yellowstone with a pile of debt.
Bryne said in the interview, CrossHarbor would help recapitalise the club and “separate [it] from the circus atmosphere of the bankruptcy as quickly as possible. We don’t think a lot of the noise of the bankruptcy is helpful to value, but it’s something that’s part of the process and everyone has to deal with that.”
CrossHarbor, which Bryne said was currently raising its ninth fund, has previously invested in residential and golfing developments at Yellowstone and planned more urban-style developments concentrated around the base of the ski area.
“We are not projecting any robust property sales for four years. We hope to be pleasantly surprised once the club is stabilised and out of the bankruptcy proceedings,” Bryne said. “We’re in a very challenging economic environment. Of all the private residential communities developed in 2004 to 2006, probably 40 percent to 60 percent are insolvent, largely due to debt.”
He admitted the club had a “lot of work to do rebuildling its reputation”, warning: “First and foremost the privacy of the club members has been really violated, we have to give them that back. We need to separate the club from public scrutiny. At the end of the day it’s a sensational story, but it’s really just a real estate development, a very special real estate development and club, and it doesn’t need to be anything more than that.”