REAL ESTATE – Property firm RREEF has formed an equity joint venture with Epiphany Capital Partners that will invest in the luxury residential club industry.
RREEF had been looking for some time at investing in the residential club business. Its director Jon –Paul Momsen said, "We looked at investing in this kind of real estate for the past 18 months.
"We think that there is a good deal of demand from consumers for the fractional ownership of luxury second homes. This kind of home ownership takes out some of the maintenance hassles of owning a home."
The amount that RREEF invested in the JV was $40m(€31m) of equity. This investment was made for its commingled fund, RREEF Real Estate Opportunities Fund II.
This capital will be invested in two properties. One is The Club at Solaris in Vail, Colo. This project features 19 $4-7m luxury residences. Some of the amenities include concierge services, use of Range Rover car, ski pass benefits, membership to an exclusive golf club, indoor swimming pool, health club and spa facilities.
The other project is located in Punta Mita, Mexico. The two communities have a membership revenue totaling more than $270m.
Epiphany Capital is hoping that the initial investment with RREEF will turn into a long-term relationship.
Its president Tom Fulton said: "We would like to believe that our company will be investing with RREEF more in the future. Our plan is to have them invest with us in the ownership of units in 25 to 30 clubs over the next 10 years."
The company’s strategy is to acquire from 19 to 30 residential units for each project. Its customer base are the baby boomer’s aged from 48 to 65. These people are typically empty nesters who are active skiers and are familiar with a luxury resort setting. They are interested in fractional ownership in a second home for three to four weeks a year.
Epiphany Capital is now looking for projects in a variety of markets in North America. The company is considering four options now in New York City. Other markets include additional sites in Mexico and high-end destination ski resorts in the US.
RREEF had its second and final closing on Real Estate Opportunities Fund II in October of 2006 for which it raised $1.6bn of equity for the fund. Other investments for the commingled fund have included condo developments and hotels. Some of the markets that it has invested in include Seattle, Portland, Hawaii and Providence, Rhode Island.