One of the industry's fastest growing destination clubs, Equity Estates is a member-owned company that plans to ultimately own between 43 and 50 homes and include no more than 300 members. Despite near universally considered an equity destination club, Equity Estates is quick to distance themselves from the label and refer to themselves as a "luxury residence fund."
Equity Estates functions as a Regulation D exempt security where members are in essence owners of the properties of the club. Based on this model, the club may only work with accredited investors and cannot actively market their club. Despite the restrictions placed on the club's marketing, Equity Estates has quickly emerged as one of the leading clubs in the industry.
Founded in 2006 and launched in 2007 by Adam Capes and Philip Mekelburg, the club was able to sell 17 memberships prior to even acquiring a residence, due notably to the clubs operating model. Properties are acquired debt free and member's capital contributions, the equivalent of a membership deposit, are used for two different functions. Operating under strict covenants, the club is required to allocate 80% of the capital contribution towards purchasing new real estate and the remaining 20% is used for operating expenses. The club's annual dues completely cover property taxes, insurance, maintenance, HOA dues, and other costs associated with each home.
Based in Atlanta, the club plans to liquidate their real estate assets 15 years after the inception of the club at the beginning in 2021. The club will use the funds to repay members their outstanding membership deposits and a portion of the proceeds. "We have a five year window to liquidate some or all of the fund's real estate holdings. We expect a normal selling market, but if we are in another real estate downturn, the five year window allows us to wait for real estate to recover," said President and Co-founder Adam Capes.
The club has two different membership plans, full and half members. Full members are entitled to 30 nights of annual travel and the club models to never exceed a seven to one member to property ratio. After two years of membership, members can resign their membership on a one in, one out basis and receive the current contribution capital price less a 7.5% transfer fee.
During the fourth quarter of 2008, when industry power players High Country Club and LUSSO Collection were both forced into bankruptcy and nearly every other club was forced to restructure their financial and organization makeup, Equity Estates quietly enjoyed thier best quarter of the year, growing the club over 50% from 2007 and brought in nearly $3 million in member interests in December of 2008 alone.
To learn more about Equity Estates, please visit the club's quick links found to the right or request a free copy of our Destination Club Guide.
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