With two luxury residence funds under its belt, Equity Estates has just launched a third fund that invests in large, spacious vacation homes.
The first fund, launched in 2006, successfully raised and deployed over $60 million toward the purchase of luxury vacation homes, which are owned and enjoyed by its investor members. "This past year we've been celebrating our 10th anniversary," said Philip Mekelburg, CEO of Equity Estates.
An additional $30 million was raised into Equity Estates Fund II, which sold out in December of 2016.
Fund III will raise over $36 million in order to acquire ten to twelve new residences.
The Homes
The targeted destinations for Fund III will include Belize, Aspen, Charleston, Jackson Hole, Laguna Beach, London, Maui, Nevis, New York, Palm Springs, Punta Mita, Riviera Maya, South Florida, St. John, Vail and Virgin Gorda. Philip Mekelburg told us that the fund currently has an offer out for the first home of the portfolio and said "it's a stunning home in a Caribbean destination".
The residences will vary in cost from $2 million to $5 million and range from two to six bedrooms and 1,500 to 7,000 square feet.
Equity Estates plans the ratio of investors to homes such that the residences are intentionally underutilized, with vacancy ratios over 40%. This means that they are only used about 60% of the time, so that investors can easily stay on the dates they prefer.
The Services
As with other destination clubs and residence funds, Equity Estates will arrange travel logistics, pre-arrival grocery shopping and develop customized itineraries for members and their friends. In 2017 they delivered the 10,000th vacation to their portfolio of homes.
Investment Levels
There are three levels of investment in Fund III as shown below:
| Membership Level | Advantage (1.5 share) |
Elite (Full share) |
Executive (Half share) |
| Capital Contribution | $662,500 | $455,000 | $247,500 |
| Annual Dues | $37,500 | $25,500 | $12,500 |
| Included Nights | 45 | 30 | 15 |
Philip Mekelburg told us "Investors are excited about our newest Luxury Residence Fund, Equity Estates Fund III, LLC. We sold out our founders’ round and exceeded our initial escrow target within 60 days of our Fund III launch."
Equity Estates plans to start selling-off the Fund III properties in 2029. When properties are sold, all net proceeds are first distributed to Investors until they receive back 100% of their investment and then they receive 80% of proceeds thereafter.
RSM (formerly McGladrey), one of the largest assurance, tax and consultancy firms conducts full comprehensive audits of the funds each year.
