Bull Bear Report Feb 18 2010

Olympic Losers: Fortress Foreclosure

By kyle stock

A suggestion to Olympic freestylers looking to name a new trick: "the default."

As the world's best skiers and snowboarders squared off on the slopes of the Whistler Blackcomb resort, creditors of the property, including Lehman Brothers, prepared for a foreclosure auction.

Friday was to be the day of the auction. A last minute postponement by the creditors mercifully spared Fortress Investment Group, Vancouver and the International Olympic Committee a very public embarrassment.

Still, the imminent financial yard-sale looms for Fortress, a New York-based private-equity and hedge-fund manager that bought the mountain's owner, Intrawest ULC, in August 2006. Intrawest missed a $524 million debt payment on the property in December and has since been liquidating its other resorts at a quick pace, seemingly stretching for the Olympic finish line.

In recent months, Intrawest flipped Copper Mountain Resort in Colorado, British Columbian Panorama Mountain Village, the Village at Squaw Valley near California's Lake Tahoe and the Sandestin Golf and Beach Resort near Pensacola, Florida.

On Jan. 8, Lehman and other creditors gave notice that they would proceed with foreclosure.

Fortress, which is publicly traded, did not respond to requests for comment.

The resort debacle isn't the first Olympic embarrassment for Fortress. It was the primary lender on Vancouver's "athlete's village," a 1,100-unit waterfront development. When the project ran over budget and the real estate market plummeted, Fortress froze its funding.

The governments of Cananda and Vancouver, meanwhile, have stepped to the fore in both cases, pledging cash to keep the lifts running at Whistler and buying out Fortress' loan on the athletes' village.

Write to Kyle Stock

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