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Cedar Fair to Purchase Sawmill Creek Resort?

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The Sandusky Register is reporting that a "reliable source" has told them that Cedar Fair has signed an agreement to purchase Sawmill Creek Resort. This could be quite an interesting development if it's true. I've never been to Sawmill but it seems to be a pretty popular destination in that area.



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Cedar Fair recently completed a $500 million bond offering at 5.250% due in 2029.  Bond proceeds have thus far been used to purchase the land upon which California's Great America sits for $150 million, the Schlitterbahn Waterparks and Resort acquisition for $261 million, assuming Cedar Fair exercises its option to purchase the Kansas City Schlitterbahn property (currently shuttered and non operating on an approximately 40 acre site) for $6 million, that brings us to a total of $417 million expended.  

This leaves a balance $83 million available for acquisitions or "other corporate purposes" to be utilized.  Given the tax value of Sawmill Creek is reported to be in the $8 million range (actual purchase price will likely exceed tax valuation) Cedar Fair will still have a chunk of change to continue acquiring properties.  Or developing aditional hotel/resort products.

I fully expect Cedar Fair to excercise the option on the Kansas City Schlitterbahn property.  The option purchase price values the land and improvements at approximately  $150,000.00 per acre--a bargain for a prime location--and with the opportunity to block competitors.

Of course, we may see Cedar Fair utilize some portion of the bond proceeds to fund improvements and/or enhancements to the recent acquisitions.  However, I feel it is likely Cedar Fair is still gunning for additional operations to acquire.

It sure is FUN to watch.  Unit price (share price) has fallen and thus pushed the unit payout (dividend) yield to over 8%.  That's lots of FUN.  



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Relating back to KI:  What if the park still owned all the land they originally did?  It's hard to fathom what would have happened today.  It was truly a destination resort as originally planned but has evolved into a suburban park.  At Coasterstock, the question was asked to the VP/GM who said that lodging would basically be a distraction for the park.  That surprised me, but I guess it makes sense because the park is understaffed as it is and would compete with premium offerings like GWL.

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