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What Robert Redford's Sale of Sundance Can Teach Investors About Exit Planning

Dec 14, 2020 by Deidre Woollard
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The year was 1968, and a handsome young Hollywood star announced he was creating a ski resort outside of Provo, Utah. Robert Redford officially bought what was once the Timp Haven resort (now known as the Sundance Mountain Resort) in 1969. This year, he's stepped away, selling the resort to Broadreach Capital Partners and Cedar Capital Partners. While we don't know how much the resort was sold for, the structure of the sale shows how this iconic real estate investor has built a successful exit strategy.

An eye toward protection

In announcing the sale, Redford told the Salt Lake Tribune that selling has been on his mind for several years, but he was looking for the right partners. Broadreach and Cedar plan to make improvements to the resort, increase the number of hotel rooms, and build a new inn. The companies have also committed to keeping the resort sustainable and practicing measured growth. The resort will also still host the Sundance Film Festival.

The 2,600-acre resort has 1,845 acres of land saved from future development through a conservation easement and protective covenants. Redford, who is now 84, has had a lifelong interest in the environment and in land stewardship. Redford and his family have also arranged with Utah Open Lands to create the Redford Family Elk Meadows Preserve at the base of Mt. Timpanogos. This gift or donation should reduce Redford's tax liability to some extent.

What the future holds

The move comes as ski season gets underway in what has been an unusual year. Both Broadreach and Cedar have extensive hospitality experience. Broadreach has owned a variety of hotels as well as having contracting arrangements with brands such as Four Seasons and Marriott (NASDAQ: MAR). Cedar owns a variety of resorts around the world, including the Shelborne South Beach in Miami.

Neither company appears to have a lot of ski resort experience, but they're working with Bill Jensen, an industry legend who left his role as CEO of Telluride Ski & Golf Resort in Colorado over the summer. Jensen is also the former CEO of Intrawest, a company formerly one of the biggest ski resort developers in the country.

What the Redford deal reminds us about real estate exit plans

Exit planning is notoriously difficult, partly because people don't like to face endings. When an investor is near the end of a long career and it's combined with estate planning, it can be even harder. Most investors don't have the luxury of waiting years to find the right buyer, but the Redford deal does show that planning ahead may be crucial to building a structure that supports the vision for the property.

When you're considering selling a large investment property, the first question is to know why you're selling and what your end result is. Obviously, you want a return on your investment, but there may be other considerations, as in Redford's case.

Another key factor is to know the updated worth of what you're selling. Getting a valuation, especially with an irreplaceable asset, is an important first step.

The structure of the sale is also important. You'll likely be facing capital gains taxes, so meeting with an accountant is a valuable early step. If you're also structuring your estate plans at the same time, you'll need to know how much you can give and what your heirs may have to pay.

The Millionacres bottom line

Right now, we're in the midst of what is called the Great Wealth Transfer as Baby Boomers pass assets on to their children and heirs. It's estimated that by the year 2061, as much as $59 trillion will change hands. Many of those assets will likely be properties. For real estate investors of all sorts, planning for the future is one of the best ways to protect yourself and your heirs.

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Deidre Woollard has no position in any of the stocks mentioned. The Motley Fool recommends Marriott International. The Motley Fool has a disclosure policy.