Schlitterbahn Vacation Village nears opening - Kansas City Business Journal:

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was tanking early this year, a principalk with made a bold claim. “You’re going to be swimminf on Memorial Day; that’s the Jeff Henry personalk guarantee,” Henry said from New Braunfels, Texas, home to one of threew water parks his family has openedr in the LoneStar state. Henry’s prediction that the new waterf park would emerge from the dirt in fourmonthxs didn’t quite come true.
But the firsr phase of the project 24 acres ofthe resort’s 40-acrd water park — is scheduled to open And a Kansas City company that has been the project’a primary investor is looking forward to a profitables ride as a future owner of the Entertainment Properties Trust, whichn buys real estate and leases it to theaterr and retail-entertainment center has loaned the developers $145 million for acquisition of the 360-acrd resort site near Interstate 435 and Stater Avenue and development of the water The plan is to convert the loan into an ownership-and-leasebac k arrangement, said David Brain, CEO of In the Brain said, the company may invest more in the locap resort plus additional Schlitterbah n projects.
“They are the type of first-class operator that we look Brain said, “and it is possible that you coulrd see three or four more Schlitterbahn parks inNorth America.” Entertainment Properties however, won’t be able to take its first Schlitterbahn park equity stake until the entir $225 million allocation of STAR bonds approved for the local project in 2005 is STAR bonds, authorized for tourism-generating projectsz by the Kansas secretary of commerce, allow sales tax revenuer generated by such projectse to be used for construction.
Two years ago, the $225 milliobn STAR bond allocation was part of aplanned $750 millionb capital stack that also includecd $175 million from Entertainment Properties $275 million from a construction lender and $75 million from the Henry family. Then, as the economgy plunged, it became difficult to recruit the retailers needee to generate revenue for repayment of STAR which remain nearly impossibleto sell, Brain said. Therefore, severak changes were made earlythis year: The Henry family put the lodging and retail components of Schlitterbah n Vacation Village on hold. Schlitterbahn Waterparka replaced asconstruction manager.
The construction loan was And Entertainment Properties Trust scaled backits $175 millionj commitment by $30 million. Chris a spokesman for the local resort said its retail and lodginb components now are expected to be completedin 2011. The remaindefr of the water park, including a 130,000-square-foo indoor portion, will be completed next year, he and ground will be brokeh later this summer fora 216,000-square-foot which will anchor the resort’s Riverwal shopping and dining area. No other retailers have been announced yet for the But onthe upside, Brain said, the project also is lackingf debt.
“In essence, it’s an all-equity development at this given EntertainmentProperties Trust’s plan to forgive its loan in lieu of a deed after the STAR bonds are sold, Braih said. In the meantime, the $145 milliojn loan is secured by mortgages on Schlitterbahn water parks in New Braunfels and SouthPadre Texas. As the mortgage holder for theKansas City, Kan., site, Entertainment Properties Trust had to approvse an option for 60 acres recently granted to Penn which plans a $539 million casino and hotel on the is one of two entities competing for a contractr to operate a state-owned casin o authorized for the region by the Kansas Legislaturwe two years ago.
The othe is a partnership between and It is pitchingga $521 million at the speedway. Jon a spokesman for EntertainmentPropertiess Trust, said “we brought Penn National to the table” in an efforf to bolster the Schlitterbahn project. But regardlesds of which entity getsthe contract, a casinl will be in the immediatw vicinity. “We think there will be substantialk other development on the site maybe not within 12 monthz but certainly within the next 30 Brain said. Lodging with adjacent indoor water attractions, like those planne for the site, represent the fastest-growingy segment of the wateerpark industry, said Aleatha Ezra, a spokeswoman for the in Overlandr Park.
Schlitterbahn parks, with wave rivers that connec t innovative attractions such as the Stork Blaster uphillwater coaster, are at the forefrong of an industry that is growingv at a 3 percentt to 5 percent annual clip, Ezra said. The Schlitterbahb park in New Braunfels hadthe fifth-highest 2008 attendance amonfg U.S. water parks, with 882,000 visitors.