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Owner & Investor Briefing · Exit Options
Paths to Realize
the Investment
Eight ways to sell, step back from or recapitalize Surrey Resort — with a working view on valuation, management contracts and a seller-financed sale.
Cost Basis and Market Value
Are Two Different Numbers
Roughly $5M of private capital has gone into acquiring, permitting, building and sustaining the resort. That figure matters — it sets the owner’s goal and anchors the replacement-cost argument — but buyers and lenders will price Surrey primarily on what it earns.
The 2026 season brought in roughly $500K, double the prior year, with the business approaching breakeven. That puts the property between two stories: a fully built, permitted asset on one side, and a cash flow that has not yet caught up on the other. Every exit option below is, in effect, a different way of bridging that gap.
At a 30–40% operating margin, that NOI takes roughly $1.2–1.8M of annual revenue — about 2.5–3.5× the 2026 season of ~$500K.
Eight Ways Forward
Ordered from the fullest cash-out to the most hands-off way of staying in. Each card notes how much cash arrives at close, how involved the owner stays, and a realistic timeline.
Outright Sale
Sell the real estate, operating business, brand and licenses as one going concern. The cleanest exit — but price is set by trailing NOI, so selling at breakeven leans on asset and replacement value.
Sale with Owner Financing
Sell with a $1–2M down payment and carry the balance as a secured note for 2–4 years. Widens the buyer pool and supports a higher price; the owner stays a lender until the buyer refinances.
Equity Partner / Recapitalization
Sell a minority or majority stake to an investor or operator-partner. Returns part of the capital now and keeps a share of the upside, including the development concepts.
Sale-Leaseback / PropCo–OpCo Split
Separate the land and buildings from the operating business. Sell the real estate to an investor and lease it back to an operator — or sell the business and keep the land as a landlord.
Master Lease to an Operator
An operator leases the whole resort for a fixed base rent plus a share of revenue, and takes on staff, liability and the operating P&L. Predictable income, minimal involvement.
Third-Party Management
Keep ownership and hand day-to-day operations, hiring, HR and marketing to a management company for a fee. The owner keeps the P&L and the upside — and the risk.
Entitle, Then Sell
Pursue county approvals for the frontage plaza or the hotel concept, then sell the property with entitlements in hand. Approved development rights can be worth more than the current operation.
Stabilize, Then Refinance
Hold one or two more seasons to grow NOI, then take a cash-out refinance to return capital while keeping the asset. Depends on NOI clearing lender coverage tests of 1.30–1.50×.
How Buyers Will Price It
Appraisers and buyers triangulate three approaches. For a property that is still ramping, the gap between them is where the negotiation happens.
Income Approach
Trailing-twelve-month NOI divided by a cap rate, often checked against a multi-year discounted cash flow at 10–11%. The method most buyers lead with — and the one that currently understates Surrey.
Cost Approach
Land value plus the cost to rebuild the improvements today, less depreciation. Supports the ~$5M basis and highlights what a buyer avoids: years of permitting and build-out. At today’s revenue, this is the seller’s strongest argument.
Sales Comparison
Recent sales of comparable resorts and glamping properties in Sonoma County and the North Bay. Thin comp set for permitted glamping, which can work in the seller’s favor.
| Stabilized NOI | 9% Cap | 10% Cap | 11% Cap |
|---|---|---|---|
| $250K | $2.8M | $2.5M | $2.3M |
| $400K | $4.4M | $4.0M | $3.6M |
| $500K | $5.6M | $5.0M | $4.5M |
| $650K | $7.2M | $6.5M | $5.9M |
| $800K | $8.9M | $8.0M | $7.3M |
Figures are illustrations of the math, not an appraisal. Surrey’s actual NOI and a formal broker opinion of value should replace them before any conversation with buyers.
Ten Moves Before Going to Market
Each one either raises NOI, lowers the cap rate a buyer applies, or lets the owner be paid for upside the buyer will capture.
Clean, Hotel-Standard Financials
Three years of accrual-basis P&Ls in the hotel industry’s standard (USALI) format, with owner-specific expenses identified as add-backs.
Sell on a Strong Trailing Year
List after a season that shows the 2× growth in full — buyers pay for the last twelve months, not the forecast.
Recurring Revenue
Pickleball and gym memberships, repeat buyouts and annual events read as contracted income and earn a lower cap rate.
Forward Book
Signed buyouts and events for the next season, assignable to the buyer, de-risk year one.
Entitlements as an Asset
Package the use permits, event permits and wine & beer license. Permitted glamping in Sonoma County is hard to replicate.
De-Risk the Flood Story
Documented winter protocol, claims history, insurance quotes and mitigation costs — a known, budgeted risk is priced far better than an unknown one.
Feasibility for the Upside
A zoning opinion and concept plan for the plaza or hotel turns a sentence into something a buyer can underwrite.
Turnkey Operations
A management company or GM in place, documented SOPs and a trained core team. Buyers pay more for a business that runs without the seller.
Transfer the Digital Assets
Website, booking engine, social accounts, guest and email lists, reviews and the brand itself are part of what is being sold.
Defer Major Capital Items Wisely
Fix what an inspection will flag; leave discretionary upgrades for the buyer’s vision and reflect them in the pro forma instead.
Bringing in a Management Company
The one path that requires no sale. A third-party manager runs operations, staffing, HR and marketing; the owner approves budgets, funds capital and keeps the profit — or the loss.
The Entry Point
Management fees are a percentage of revenue, so a manager’s interest depends on whether that percentage can pay for a general manager, regional oversight and accounting. At Surrey’s 2026 revenue of ~$500K, a 3% base fee is about $15K a year — far short of what a manager needs.
For a resort at Surrey’s scale, expect independent managers to require a minimum monthly fee — typically the greater of 3% of revenue or a fixed amount — with the on-site GM and staff paid by the property on top. At today’s revenue that minimum becomes a fixed cost that can outweigh the savings; the arrangement starts to pay for itself as revenue moves toward $1M and beyond.
A master lease or an operator-partner who takes a share of profit is likely the more realistic near-term handoff — with a management agreement revisited once revenue grows.
Management Agreement
Master Lease
Carrying the Note: A Working Model
The buyer pays $1–2M down; the owner carries the balance as a first-position note for 2–4 years, after which the buyer refinances and pays it off. Adjust the terms to see what the structure produces.
Where the Rate Lands
Seller notes typically price 1–3 points above bank rates. With prime at 7.00% and stabilized hotel loans around 6–7%, a seller note in the 7.5–9% range is typical; private hotel bridge lenders charge 9.75–13% plus points, which makes a seller note attractive to a buyer. The IRS minimum (AFR) is about 4%.
8–8.5% interest-only for a 3-year term, with a modest step-up if the buyer extends.
The Balloon Is the Key Risk
At maturity the buyer must refinance. Banks will require NOI that covers debt service 1.30–1.50×, and flood insurance as a condition of the loan. If NOI has not grown, the buyer cannot refinance and the owner must extend or take the property back.
A larger down payment, a buyer with an operating track record and proven liquidity, and a pre-agreed extension option at a higher rate. For scale: interest-only payments of ~$280K a year exceed half of 2026 revenue, so early payments will come from the buyer’s capital, not operations.
Protecting the Owner
First-position deed of trust and a UCC filing on furniture, fixtures and equipment; personal guarantee; due-on-sale clause; required insurance including flood; property tax and license covenants; quarterly financial reporting.
Default and cure periods, a step-in right to protect the licenses and permits, and a separate lender’s title policy.
Tax Shape of the Deal
An installment sale spreads the capital gain across the years principal is received. Interest is taxed as ordinary income, and depreciation recapture is generally taxed in the year of sale, even before the cash arrives.
Model the after-tax proceeds of each option with a CPA before choosing a structure.
Staying Flexible, Step by Step
The options are not exclusive. One sequence keeps every door open while the numbers catch up with the asset.
Prepare
Close the 2026 books, assemble the data room, and get a broker opinion of value.
Hand Off
Interview management companies; sign one with a clean termination-on-sale clause.
Stabilize
Run a full season under professional management; push midweek, memberships and buyouts.
Go to Market
Offer for sale on a stronger trailing year, with owner financing available to widen the field.
Choosing the Right Path
The right exit depends on the owner’s timeline, how much cash is needed at close, and appetite for staying involved. A short working session on those three questions narrows eight options to two.
Market references, October 2026: HVS U.S. Market Pulse, July 2026 (hotel cap rates 7.7–8.5%, discount rates 10–11%, financing at 55–65% loan-to-value and 1.30–1.50× debt coverage); HospitalityNet and CoStar on management agreement fees and terms; PeerSense bridge loan survey (hotel bridge 9.75–13%); FedPrimeRate (prime 7.00%); RoverPass (RV and campground cap rates 8–12%); LegalClarity on seller-financing terms and installment sale treatment.
This briefing is a strategic overview, not legal, tax or investment advice. Valuation figures are illustrative; confirm with a licensed broker, appraiser, CPA and real estate attorney before acting.