In a new twist to its vacation home funds, Equity Residences has launched a fund that is focused on buying homes at Mammoth Mountain in Southern California.

The earlier funds from Equity Residences have bought homes in a variety of locations across North America, so this is the first of their funds to be aimed at just one location.

But, just like the earlier funds, the goal of this fund is to provide investors with a financial return in addition to wonderful vacations. "We are launching funds in specific locations," said Managing Director Greg Salley, "Mammoth is in our backyard and is very popular for people in Southern California,” he continued.

The Homes

This new fund, the Mammoth Residence Fund, LP, is initially buying two homes in a duplex. Each 2,720 sq. ft. townhouse style residence has four bedrooms, including a bunk room, plus four bathrooms and sleeps 10. These homes are located near Mammoth Mountain’s Eagle Lodge in the private, gated Obsidian development.

Investors will also have access to the private Clubhouse at Obsidian with amenities including pool, fully equipped exercise center, sauna and game room.

Investor Use

Each investor will be able to reserve three weeks of winter “Planned Vacations” and three weeks of summer “Planned Vacations”, plus additional lodging on a “space available” basis ie when the residences are not booked by other Investors.

Investors can also reserve both homes for the same week, for example if they have a large group such as a family reunion or get together.

And if an investor doesn’t want to use their “Planned Vacations” there are two other options. They can either exchange their time for stays at one of Equity Residences other fund destinations or at residences available through their partners Elite Alliance and ThirdHome. Or, the manager will rent out the time on their behalf, and so help cover their annual operating dues.

Part of the reason for choosing Obsidian is that while the town of Mammoth Lakes has restrictions on short-term rentals of single-family houses, short-term occupancy is allowed in the Obsidian development.

Mammoth Mountain

As one of the largest ski areas in North America, Mammoth Mountain offers 3,500 acres of skiable terrain, 400 inches of snowfall a year, and ski seasons that can last into July.

Plus, in addition to all the skiing, snowboarding, tubing and snowmobiling the summer activities can include mountain biking, hiking, fishing and weekend events in the village.

Mammoth was acquired by Alterra Mountain Company in 2017 as part of the consolidation that has been happening in the North American ski industry. Alterra has introduced their IKON pass membership which also allows ski access to Aspen, Deer Valley, Jackson Hole, Steamboat, Squaw Valley, Tremblant and several other resorts.

“Mammoth has only half recovered from the downturn,” Greg told SherpaReport “and is surrounded by National Parkland, so there are restrictions on what to build or buy. This creates a great opportunity for potential investors.”

The Investment

There will be just seven investors per homes, so a total of 14 investors in this first offering. The Fund will own the two residences, and has an option for an additional two residences, which would make a maximum size of 4 homes and 28 investors. The fund plans to own the homes for 12 years and will then start to sell them.

Greg Salley noted that this 12-year hold period ties in to the 10-year upgrade plan that Alterra has put in place for Mammoth Mountain. “If these are realized, they should enhance the upside potential,” he commented.

As with other Equity Residences funds, the proceeds from the sales will be split to provide 100% return of the initial investment to each investor and then any gains will be split 80% to the investors and 20% to the managers.

The subscription price is $192,500 per unit, which entitles the owner to the 6 weeks of (“Planned Vacations”) usage. The fund will also charge a bi-annual Operating Fee billed in advance starting at an estimated rate of $6,000 twice per year for each Partnership Unit, plus a cleaning fee of $350 per stay.

This new fund is available to accredited investors through an offering memorandum in a Delaware Limited Partnership.