The sale of The Stanley Hotel to the Colorado Education and Cultural Facilities Authority came one step closer when a preliminary limited offering memorandum for revenue bonds was published Friday.
The offering seeks more than $291 million in three bond classes: a $210 million tax-exempt senior Class A-1 series, a $31 million senior Class A-2 series, which is taxable for federal income taxes, and a $50 million junior Class B series.
Fees associated with this sale totaling $46 million will be funded through a state sales tax allocation in the Northern Colorado regional tourism zone.
A lien on the Stanley facilities will secure the senior bonds. The junior bonds are subordinate in payment to the senior bonds and are limited in their payment rights until the senior bonds are retired.
The proceeds of the offering will be used to acquire the Stanley Hotel complex, including all of the buildings on the Stanley campus. Additionally, the funds will finance the construction of a four-story hotel expansion, which will add 65 guest rooms, renovate the MacGregor Room for use as a restaurant, and construct and equip the 64,700 square foot Stanley Event Center at an estimated cost of $114 million.
The purchase price for the existing facilities is $197 million, paid for by the issuance of $92 million of junior bonds to the seller, $99.5 million of cash, and $5 million of deferred cash.
An appraisal issued to the seller valued the land and existing buildings on the Stanley campus as of July 2, 2024, at $178 million.
RBC Capital Markets, an affiliate of the Royal Bank of Canada, is underwriting the offering and will purchase any of the senior bonds not sold to investors.
In May 2024, the Colorado legislature amended the statute governing CECFA to enable the purchase of The Stanley.
John Cullen, the current owner of the Stanley through Grand Heritage Hotel Group, will be the chief executive officer of a newly formed company that will oversee all of the facilities and their operations and assist with the transition of management to a subsidiary of Sage Hospitality Resources, one of the largest privately held hotel development and management companies in the country. Sage operates 63 hotels in 18 states, including 30 in the Rocky Mountains and western United States.
Cullen will serve without compensation. The Executive Director of CECFA, Mark Heller, will be the chief administrative officer of the new company.
Grand Heritage Hotel Group, which will be the development manager of the hotel’s expansion and the planned film center, will receive a development fee of 5% of the development budget upon completion of the projects.