Monday, September 28, 2009

Equity Estates - destination club thrives with fiscal transparency

While the economy takes its time to recover from recession, the destination club Equity Estates is thriving, with 30 new members since the start of 2009 and two more luxury properties in its portfolio -- one in La Jolla and another in midtown Manhattan near Times Square (pictured above.)

CEO Philip Mekelburg calls Equity Estates a luxury residence fund."We re typically cash buyers of homes – we leverage the minimum amount of 23 percent," he told me not long ago. As a result, the company has remained in sound financial condition while other larger, highly leveraged clubs struggled, he said.

Mekelburg points out that Equity Estates is dedicated to fiscal transparency so members know their money is safe. The company puts 80 cents of every dollar into real estate, compared to the 50 % level maintained by some other clubs. It now has 10 residences, with an average price of $3 million. Full members are entitled to 30 nights a year in any of the properties, while executive members get 15 nights.

But perhaps the most unusual thing about Equity Estates is that it has an exit strategy. Starting in 2021, says Mekelburg, the club will start selling off its properties and distribute the proceeds among its member owners. Full membership requires a capital contribution of $375,000 to join. Its properties are in typical luxury vacation areas, such as Turks and Caicos (Caribbean) Deer Valley (Utah) and Hilton Head (South Carolina).

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Thursday, September 10, 2009

Destination club Ultimate Escapes to be acquired by public company

In the latest news from the sometimes troubled luxury destination club market, the leading club in terms of properties -- Ultimate Escapes -- is getting a big new public partner.

Secure America Acquisition Corp. has announced it is about to invest a minimum of $20-million in Ultimate Escapes, which itself is in the process of absorbing Private Escapes, another destination club. Ultimate is the second largest club in terms of number of members, with more than 1300 members. (Number One is Exclusive Resorts, with more than 3,000 members.) The club has handsome homes in desirable locations such as Nevis, pictured above.

The deal means that Ultimate Escapes not only gets a cash infusion but becomes a public company. Time will tell if that is good for members. In the short run, it undoubtedly is good for Ultimate Escapes, which lost over $15-million last year,according to the Washington Business Journal. As for Secure America, its previous acquisitions have been in the field of homeland security. Guess you could call this one "vacation homeland security."

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