Stanley Hotel owner: Completion of sale to state likely soon

ESTES PARK — A complex deal to sell the privately owned Stanley Hotel to a state entity, which has been in the works for months and is expected to help boost Colorado’s profile as a player in the global entertainment industry, is on the verge of closing. 

“I think we’ll close in probably the next six to eight weeks,” John Cullen, whose company Grand Heritage Hotel Group has owned the iconic Estes Park lodge for decades, told members of the Colorado Economic Development Commission on Thursday morning. “The market is right; the market timing is right; the bond rates are in the right place.”

The 116-year-old, 140-room Stanley Hotel inspired Stephen King’s “The Shining” novel, which was adapted to the big screen by director Stanley Kubrick in a film widely regarded as one of the all-time greatest entries in the horror-film genre.

In late May, Colorado lawmakers passed the Creative Industry Community Revitalization Incentives legislation, House Bill 1295, which helped to pave the way for the Colorado Educational and Cultural Facilities Authority to facilitate a plan to buy the Stanley from Grand Heritage and see a long-languishing film center at the hotel completed.

Once complete, the Stanley Film Center will be “a two-story building with approximately 64,735 square feet, to include an approximately 864-seat outdoor amphitheater with a fire capacity of 1,200 (including standing room-only), an event center, a film museum, a sound stage and related amenities, to be constructed adjacent to the main hotel building and connected to the concert hall,” according to a state documents. 

Blumhouse Productions LLC, the juggernaut production company behind horror films and franchises such as “Get Out,” “Five Nights at Freddy’s,” “The Purge” and “Paranormal Activity,”  will serve as the film center’s exclusive exhibit curator.

During a recent visit from staff with Blumhouse and its parent companies NBCUniversal Media LLC and Comcast Corp. (Nasdaq: CMCSA), the parties agreed on a deal to allow the Stanley to host four film festivals — with a new movie launched at each — over the next year. 

“None of that would have happened here in Estes Park without this” deal to sell the property in place, Cullen said.

The upcoming film festivals are expected to result in hotel room sellouts on 16 to 20 nights, “which is immensely lucrative, especially when the weather isn’t nice,” he said. 

Once the planned upgrades are complete, the Stanley is “going to become one of the great cultural capitals of Colorado, if not something more.”

Management at the Stanley is part of a regional push to bring the Sundance Film Festival to nearby Boulder, which last month was selected as one of six finalist cities to host the world-renowned event for a decade starting in 2027. If Boulder is selected, the Stanley and its film center would likely host some Sundance events during the festival week.

Officials with the Colorado Office of Economic Development and International Trade have joined Cullen, whose company is expected to continue operating the hotel upon the state’s acquisition, in repeatedly saying that a sale of the Stanley is necessary to fund important improvements such as the completion of The Stanley Film Center.

“It is a complex transaction, without a doubt, but it’s already starting to pay off,” Cullen said of the plan to sell the hotel to CECFA, which, according to its website, “is the official state issuer of tax-exempt bonds for capital projects furthering the missions of educational and cultural organizations.”

Arizona-based Community Finance Corp., a nonprofit group that specializes in forming public-private partnerships that provide alternatives to the traditional funding schemes governments often use to pay for capital improvements and infrastructure projects, was previously in line to buy the Stanley — through a complex financing mechanism — from Grand Heritage by way of a $475 million bond issuance from CECFA.

That deal apparently fell through this spring — the parties involved have been mum about the circumstances — and a new (and still quite Byzantine) deal structure was created that allows CECFA to serve as both bond issuer and near-term owner of the Stanley.

That new deal is a  “really complicated transaction with many parties and stakeholders,” OEDIT deputy director Jeff Kraft said. “If this transaction works, there will be a huge long-term public benefit because the hotel will ultimately be owned by the public. We’re very excited about that.”

If the Colorado Educational and Cultural Facilities Authority’s plan comes to fruition, the state will own the Stanley upon repayment of the bonds — still expected to total more than $400 million — and revenues from the property will flow back into the coffers at CECFA.

The bond issuance and sale of the Stanley property to the state “is intended to facilitate the up to $46,399,582 in state sales tax increment financing over 30 years approved by the EDC under the Regional Tourism Act” to help get the Stanley improvement projects across the finish line, an OEDIT spokesperson told BizWest in an April email.

The passage and signing on HB 1295 in May allowed CECFA to expand its operational mandate to include certain new functions it would take on as the owner of the Stanley.

“If this wasn’t the actual plan, it really turned out pretty good,” Cullen said of his company’s pivot to a new mechanism for offloading the Stanley property. 

While the sale might be nearing completion, certain details remain murky. For example, neither Grand Heritage nor the state have commented on why the deal with Community Finance Corp. fell through or what Cullen and his company stand to gain monetarily from the transaction. 

“We are very close (to closing) on the transaction, but there are some reasons to keep some of the details confidential for securities-law purposes,” Kraft said. “But I think further news is imminent and I feel like (OEDIT is) being kept fully in the loop on what’s happening with the transaction.”