October 2007

Hawai'i Fractions:
Just back from the second, Ragatz/Pacific Rim/Trans Pacific Mortgage Hawaii seminar on fractions. Following their July seminar Pacific Rim and Trans Pacific are committed to educating the Hawaii market to fractions, so as the offerings grow they will grow with intelligent development, marketing and sales.

The one, very major impediment to a fast start to projects is the exemption for six interests or less, but use has to be for sixty consecutive days. So, sell two, fixed 60-day periods, sell two, rotating sixty-day periods, but sixty days it must be. Owners, however, can internally trade within those blocks of time, but that ability to trade can't be a material part of the offering. This probably rules out 70% of the easy market for sales.

Registration under the timeshare act is occurring with a few projects and more need to come along, so use plans can be designed commensurate with a broader market demand.

Dick Ragatz, as usual, gave a compressive update on the fractional business and it's explosive growth.

The One-Off House

Old Republic Mortgage has a database of some 40 one-off houses being offered as fractions on the 1/6 exemption basis. So that's 240 potential sales. They list 15 in escrow.

Dick Ragatz will have a pronouncement on this one-off product by or at his upcoming March conference. But in the meantime my take is that while some of these houses in the $10-14 million dollar category, so shares are being sold in the $2.5 to $3 million range; others are in the $85,000 range, and all in between; the systemic problem is post-sale management. Who's going to provide and at what price? Some buyers may be okay with standard property management services, but the upper-end will need the specialized and dedicated service that only a 'project' can offer. So, whadda 'ya do?

•Snowbird's Night in New York event was two weeks ago, and over 250 showed up in midtown on a weekday night! Real loyalty. Our sales team met with all reservation holders in that market, naturally, to secure their deals.

•Up at Meriwether Ranch Josh Potvin, Sherman's son, has emerged as our top salesperson for 2007. Congrats.

• Also at Meriwether Dede Bacon, fresh from her excellent results at Kirkwood, has been filling in, to meet mini vac demand, this fall. She has, naturally, snagged her share of sales. Thanks, Dede!

•At Vallarta Gardens, in PV, Ron Frank, Mac MacEwan and Ash Offermann are moving ahead to get that project structured for fractions, amenitized, marketed and set-up for sales. Fortunately, the project's location, on the Bay of Banderas, is exploding, so opportunies are now available for local lead generation programs.

•Star has sold the Nautical Inn, Lake Havasu, to its investor group on a pre-arranged purchase agreement. So, we are out of the muscle-boat business.
And, out of the condo-hotel and timeshare businesses, too.

When does Mel Grant's fractional exchange company open up?