For many families, this brought years of wonderful memories and happy times together, but now aging owners longer can use their weeks, and their options are limited. What they viewed as an investment has no financial value. Many resorts are suffering shrinking owner bases and increased delinquencies, leaving the active owners with increasing maintenance fees and special assessments just to sustain operations. Resort declaration and governing documents nearing their sunset clauses and opportunistic management companies can leave owners in the dark.
What will be the impact on resorts? Will more owners default on the payment of maintenance fees? Will the rental market recover fast enough to make up for the rental losses, and will new regulations make collecting the delinquent assessments even harder?
Repurposing can provide a win-win opportunity for owners who wish to continue enjoying their vacations, as well as for owners who are ready to exit. Though timeshare resale values may have decreased to virtually zero dollars, the value of the underlying real estate has not. Most timeshares are in highly desirable locations. Repurposing means that some or all of the property will move from a timeshare structure to a different type of real estate, such as full-ownership condos or apartments. Instead of walking away with nothing, or even paying to return their week, owners can share in the profits from the sale.
This sounds simple, but there is a bit more to it and it’s not right for every resort. It requires gaining clear title, securing title insurance on a property with complex ownership, and working through the legal requirements to assure compliance with your resort’s governing documents and state statutes.
Your resort has unique circumstances and requires custom solutions. Although COVID-19 has magnified pre-existing challenges, it also provides an opportunity for your board to assess your resort’s long-term health professionally and objectively.
Is repurposing and restructuring right for your resort? Contact Lemonjuice Capital for more information.