Could the Mighty Casey Strike Out?

The British Columbia real estate market has faced an onslaught of bad news this past six months.

But nothing prepared people in BC for the ominous development with the jewel in the crown that was disclosed today.

Intrawest, the developer and operator behind Whistler, Blackcomb and Panarama, is on the verge of receivership.

Intrawest has a massive debt maturing on Thursday. Fortress, the investment management company, that is the parent of Intrawest, can no longer guarantee the debt. So an attempt is being made to renegotiate the debt with all the banks involved.

The problem is that Intrawest's debt is trading at only 70 cents on the dollar in the debt trading market, so the market does not see Intrawest continuing in its current form. The company will be restructured. It has good assets. But, the new lenders are not likely to allow Intrawest to invest in the operations of its resorts the way it has over the past 20 years. In several Intrawest resorts, there are hundreds of unsold condominiums. We can say, with almost virtual certainty, that this inventory will be sold off, quickly, to raise much needed cash, but at big discounts from today's list prices. We saw this happen a few years back in New Jersey where Intrawest discounted their entire inventory by 25% to sell product.

The restructuring of Intrawest is THE body slam to BC real estate that will cripple it, from both an operational and reputational respect. The body slam is part of the 1-2 count on the way to 3 count. It has not yet been reported broadly, but Fortress plays a key role in the 2010 Olympics. Fortress is financing the $1 billion Olympic Village. And Fortress itself is also in serious financial trouble. Its share value has dropped 80% to just over $5.00. And it holds other real estate investments, not just Intrawest, just require massive restructuring including a large portfolio of real estate in Germany.

With the exception of principal residences, or investment properties that have little debt, we are on the verge of recommending an-accross-the-board sell for all real estate on the Canadian Pacific Coast.