After recently selling out its fourth real estate investment fund, luxury destination club Equity Estates has announced a fifth fund (Fund V), which is raising $50 million and will buy 12 properties.
Equity Estates operates luxury residence funds. All members are investors in one of their funds which own the club homes. They are able to enjoy the homes as vacation properties while watching their investment grow as the properties potentially gain value. Equity Estate’s first fund launched in 2006. The company now has homes in the US, Europe, and beyond.
Own Vacation Properties
As with previous funds from Equity Estates, investors will own a share in the overall portfolio of residences. Their ownership rights allow them to stay at these luxury vacation homes and at properties in Equity Estates’ other fund portfolios, thanks to a reciprocity agreement between the funds. The fund offers two major benefits: access to an array of luxury vacation homes and the perks of investing in a portfolio which could see long-term appreciation of the properties. At the time of liquidation, approximately ten to twelve years from now, net proceeds will be redistributed among the investors first, until 100% of their original investments have been returned, and then 80% of the net proceeds thereafter.
Vacation Nights
Investors in the portfolio can enjoy between 15-45 nights each year in any of the Equity Estates properties. The number of nights depends on the original investment level. The nightly rate at these properties is about $1,200, (based purely on the annual fees) and Equity Estates says that the average rate at a comparable property can be between $2,000 and $6,000 per night. Earlier funds had three investment levels, however, in response to feedback from current and prospective members, Fund V will have five levels of membership:
| Membership Level | Advantage | Elite Plus | Elite | Executive Plus | Executive |
| Capital Contribution | $810,000 | $705,000 | $570,000 | $442,450 | $299,950 |
| Annual Dues | $45,000 | $37,500 | $30,000 | $22,500 | $15,000 |
| Asset Management Fee | $8,100 | $7,050 | $5,700 | $4,424 | $2,999 |
| Annual Nights | 45 | 37 | 30 | 22 | 15 |
Philip Mekelburg, Founder and CEO of Equity Estates, says that Fund V has already reached its minimum threshold to break escrow and begin to buy properties. They have received fully executed investment commitments both from those who were unable to buy into Fund IV and those who will soon be liquidating their investment in Fund I. Mekelburg adds by the end of the year, Fund V will be close to 20% subscribed, positioning them to possibly sell out in 2022. They are targeting certain desirable locations, including Paris, Tuscany, Southern California, Cabo, Deer Valley, and others.
As with previous funds, they will strive to create a balance between city, beach, and mountain properties to allow for a variety of adventures. Each property will have an average value of $4 million. Mekelburg says that when considering a property, they look for destinations with year-round availability that will also be a good longer-term investment. Now that they are on their fifth fund, Equity Estates has the benefit of 15 years of experience to draw on as well as input from members. They plan to make further announcements as properties are acquired for the new fund.
