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Kalahari Resorts is looking at alternative financing methods, still committed to Fredericksburg park
Kalahari President Todd Nelson says he is confident about financing for the park here.
file/ROBERT A. MARTIN/THE FREE LANCE-STAR
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Date published: 12/30/2008
Housing prices must stop falling before Kalahari Resorts can get a financing package in place and start work on its planned Fredericksburg water park resort and hotel.
The Wisconsin-based Kalahari is proceeding with plans for a 700-room hotel and 200,000-square-foot indoor water park on 49 acres of Celebrate Virginia South, company President Todd Nelson said yesterday.
The financing problems will push back the start of construction, however, and could delay the planned 2010 opening, he said.
The estimated price tag for the project is $250 million, although Nelson said recent declines in oil and other commodities could lower that figure. Kalahari plans to put up $20 million itself and has been working to raise the other $230 million.
Nelson said he's "feeling real confident" about the financing coming through, and he's seeing banks loosen up a bit with lending. But his lenders have told him that housing prices must stabilize before he can get the loan.
He hopes that will happen by April, and that he can start construction by the end of the upcoming summer.
"We have never been more committed to a project," Nelson said.
The company's initial plan was to raise about $80 million by selling 150 condo units at the Fredericksburg park, and borrowing the remaining $150 million from Wisconsin community banks. That's the model it used to build the two parks in Wisconsin and Ohio.
But the economic downturn has forced Nelson to come up with a Plan B. Kalahari no longer intends to sell condo units, as that market has weakened significantly. The company is working with a couple of large financial institutions--which Nelson declined to name--to raise that equity portion of the funds.
Nelson said he plans to still work with the Wisconsin banks to finance the remaining part, but that a larger financial institution will take the lead.
The ongoing credit crunch has pushed back the project's timetable. In October, Nelson said he hoped to break ground by April 2009. He said the delays are allowing the company more time to design a better product.
Kalahari’s other parks doing well
Business remains brisk at Kalahari Resorts’ two water park resorts and hotels in Ohio and Wisconsin despite the economic downturn, company President Todd Nelson said yesterday.
Nelson said the parks haven’t experienced much of a decline this year. He said there were a couple of Christmas cancellations, and people are perhaps spending slightly less money at the parks, but overall it’s been a good year.
Kalahari this month opened a $20 million, 110,000-square-foot indoor theme park at its Wisconsin Dells property. He said the park has been packed of late.
Nelson forecasts another positive year in 2009, which he thinks will help him get the financing for the Fredericksburg park.
“We think our track record speaks for itself,” Nelson said. Nelson explains that people are willing to pay $800–$1,000 for a fun few days for the family at his parks, while they’re cutting back on more expensive vacations.