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Recent Destination Club News

Kagehitokiri2

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http://www.exclusiveresorts.com/#2009_YIR
http://www.exclusiveresorts.com/images/BR-YIR2009-PROSP.pdf
3259 members
379 resignation list (could be worse...)
$360MM "bank" debt (is this worded to exclude private equity?)

intrawest bought a 67% stake in A&K in july 2004, with option to buy other 33%. i dont think they ever exercised that option. again fortress moved it from intrawest's portfolio into their own portfolio when they acquired intrawest. this has absolutely nothing to do with anything, but >
http://news.google.com/news/search?um=1&cf=all&ned=us&hl=en&q=fortress+intrawest&cf=all&scoring=n

im "impartial" because i feel extremely strongly about trying to be that way. i wouldnt act differently if i was a member of a club, or a club employee. i would just have more information. (assuming no NDA etc)

regulation - i guess only obama can save us from the evil corporations?

i have said before that it would be nice if clubs got busy dying/merging/etc. (acting reasonably/seriously) but im not going to say that industry health is worth members losing money faster. mainly because there is no health.

certainly UE is going to be coming to a head again sometime soon. will be interesting to see what happens.
 
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Kagehitokiri2

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the one unanswered question i have regarding EE is what is contractually linked to debt payments. they have caps of 23%/30%, one being total and one being real estate, dont remember which is which offhand.

this is compared to > AK has 5% cap. luxus does not do debt. m private residences is low, but their actual cap is similar to EE.

pretty sure rocksure has no debt in their first 2 small funds, but not sure about their 3rd larger fund. not sure what hideaways is like.

fooled once, were/are you a member of another club? were you on DC4MS?
 
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Props to ClubsRDead for giving bullet points and specifics for his/her viewpoint. This is MUCH better than the rhetorical non-sensical anti-DC rants that usually pop up when DCs are discussed.

Other than that, Kage and TT have pretty much covered the corrected facts and a knowledgeable response.

It's important to note that most of us who are interested in the DC concept typically LOVE the travel but are UNSURE about the future of the DC business model. Various levels of optimism and pessimism mixed in with semi-transparent DC facts make for any interesting forum read!

Got to agree, travelguy.

In response, the Intrawest argument is a total red herring that some salespeople in the industry have used to sell against A&K (I actually heard that straight from the horse's mouth once) when it has zero basis in reality. If Intrawest goes bust, the Fortress private equity fund loses all or most of the company just like a mutual fund that has invested in a company that has gone bust. As a practical matter, from what I've read, Fortress has already written down most of that investment to pennies on the dollar. Of course, this has nothing to do with A&K or the A&K RC. There is no ownership crossover.:wall:

However, for argument sake (even though A&K is doing well) and just to respond to the next potential argument, let's say something happens to A&K. A&K owns the A&K management company, but does not own the houses owned by the corporation owned solely by the members. Therefore, even if A&K went bankrupt, they have a zero ownership stake in those houses. It's like saying if I own a vacation house and the rental manager goes bankrupt, I'm going to lose my house. The downside to this scenario would be that the members would have to find a new manager, which I think would be relatively easy to do, but more importantly, they'd lose access to the houses that they haven't bought which A&K is letting the members use and you'd lose a strong backer and marketer, but again the houses bought by the members would not be tied up or lost as you note. This is so different than the non-equity scenario like T&H where the members owned nothing other than the right to use the properties owned by someone else.

On another point, sure, A&K put up money to buy BH and CR, and I have no idea whether A&K incurred debt to do so, but again that has nothing to do with the member's corporation that bought the houses. The CR members actually put up money in the deal to go debt free on those houses. The equity that was in the houses were transferred. I'm sure A&K had to put capital to essentially buy the management companies, and I'm sure that long term they want a return on that invesment with commissions from selling memberships, just like Ritz-Carlton wants a return on their DC invesment, but if they don't get enough return, you go back to the scenario above, which is not that bad of a doomsday scenario in my book.

I've seen the sales numbers in member updates and I've heard the YTD numbers. They are what they are. We'll get them in the financials next month. Last year was very heavy on the short trial memberships, which are better than nothing (as at least you've got people trying the product and hopefully buying the product eventually), but certainly not ideal. This year it's been either equity memberships or two-year trials, and they're on a good pace. So is Hideaways and EE. Again not sure about the rest.

As a member, I've got no real complaints about the pricing if I really step away and look at the big picture. Sure the new folks are paying less than me, but so are my new neighbors who just bought a house down the street. It's reality.

Where I'm going to agree with CRD is the need for regulation. I personally think that like the timeshare industry, there have been many crooks in the DC industry. Most of which are out of business. I personally think it ought to be criminal to take in money as deposits, promise perpetual vacations, not use the bulk of it to buy real estate, and instead blow it on operational expenses, with the hope that you have new members coming in later. There are still a few DCs out there that to my knowledge have no guidelines as to what is done with deposits. It wouldn't fly in the more regulated world of timeshares, and it shouldn't fly with DCs IMHO.

This forum is definitely a hodge podge of opinions depending on your personal experience with DCs. I've got no complaints so I'm more optimistic, but I can also understand the complaints of those who have been burned.
 

wilkes591

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I will give JT points.

BTW - No one is going to defend JT and his UE circus. Although he does get points for creativity in stalling the inevitable!

JT did not put T&H in Bankruptcy while the economy was booming. The T&H member's are not due anything yet, like someone else is claiming.

PE was going under, and some how UE came out of that debacle and went "public".

UE's is getting new members writing checks for full deposits.

The rabbit was pulled out of the hat this week, many current member's paid an additional year of annual dues for additional advance reservation days. Looks like the club will raise 10 to 15 million by 03/31/10 on a voluntary basis from willing members. I was not one.

I also hear CapSource will be MODIFING the lending facility for a one time payment on 04/01/2010. The modification has very favorable terms, including an equity position for CapSource in UE.

Say what you want about JT, but somehow he finds a way to keep UE afloat and I can continue to travel and enjoy my PE deposit that I will never see.
 
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SciFrog

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JT keeps UE afloat, which is amazing considering how bad their stock is doing... Getting people to put up more money? They are insane. It is one thing to keep paying dues to travel. But more money?

And more advance reservation with the current home portfolio? Good Bye availability...
 

Kagehitokiri2

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many current member's paid an additional year of annual dues for additional advance reservation days. Looks like the club will raise 10 to 15 million by 03/31/10 on a voluntary basis from willing members. I was not one.

jesus christ. i hope they get a lot of good use in now.
The CR members actually put up money in the deal to go debt free on those houses.
as you were a crescendo member, nice job.

in all seriousness re regulation, would be nice to see current laws enforced, and in general an improvement in rule of law. ("common sense"??)
 
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JT did not put T&H in Bankruptcy while the economy was booming. The T&H member's are not due anything yet, like someone else is claiming.

PE was going under, and some how UE came out of that debacle and went "public".

UE's is getting new members writing checks for full deposits.

The rabbit was pulled out of the hat this week, many current member's paid an additional year of annual dues for additional advance reservation days. Looks like the club will raise 10 to 15 million by 03/31/10 on a voluntary basis from willing members. I was not one.

I also hear CapSource will be MODIFING the lending facility for a one time payment on 04/01/2010. The modification has very favorable terms, including an equity position for CapSource in UE.

Say what you want about JT, but somehow he finds a way to keep UE afloat and I can continue to travel and enjoy my PE deposit that I will never see.

Thanks for sharing, Wilkes. Also got to give JT credit for the creativity.

Just for clarification, are members essentially prepaying for two years of dues? If so, what happens a year or two out when you miss those payments. Make the same offer, I guess?

On the modification, I assume you mean favorable terms for UE, right? Or do you mean CapSource, because they get an equity stake

Thanks again for sharing. UE is always an interesting one to watch.
 

ClubsRDead

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Oh Please....

He's convinced members to pay more in advance and is going to have $10-15MM by month end? That is the BIGGEST load of BS I have ever heard. Who tells people this information. It's certainly not on the member web, nor was their any offering of the type.

And now Cap Source, a public REIT, so one that has little discretion in how they operate, is modifying secured loan terms for UE, taking an equity position (bigger than they already had) - and that too is not publicized? Once your company went "public," anything like that - especially change in any shares or controlling interests, or modifications to credit facilities, has to be voted upon and published.

Maybe if people just say "I think I can, I think I can, I think I can" over and over, it will happen...
 

Kagehitokiri2

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yes, only you know anything. thanks for clearing everything up.

i just went through capsource 2009 by Q and 2008 annual. and i think full year 2009 prelim earnings. guess what? no mention of destination clubs.

wilkes591 said he didnt pay, yet you accuse him of making stuff up to say UE is great? which he never said to begin with. not to mention >
Looks like the club will raise 10 to 15 million by 03/31/10

I also hear CapSource will be MODIFING the lending facility for a one time payment on 04/01/2010. The modification has very favorable terms, including an equity position for CapSource in UE.
 
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ClubsRDead

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Aren't you defensive? No one, especially me, said anything about "Wilkes." He flat out said he was an original PE Member (so if he has issue, it should be with Keith, not JT -- because that model Keith cloned from McGrath was broken to begin with).

You are correct in re-stating what I questioned, JT and co. raising $10-15M from members by month end. Seems unrealistic. And for the most part unannounced. So, versus questioning "Wilkes," I question who is feeding this BS to these members.

Not sure what your point was about reading Cap Source financial data and it containing nothing about DC's. No shit. But presumably you know they are the primary lender for more than one DC. Their income, if any stated, is in the form of interest, not fees or dividends, and certainly not in profit-share from equity in any. So, I suspect this may be nothing more than a line of BS, also perpetuated by JT, or RK, not "Wilkes." Hey, maybe JT was given a deferral on a payment or something due April 1, which should save him roughly $800k+ for a month -- a pretty big deal if you're not making any money.

Accept the reality - it appears that others have. Although how anyone in AK (sorry TT) can think they are immune to financial collapse just because they call it an "equity" club is beyond me. Saying AK is the only thing that made money for Intrawest is strange. Intrawest's resort holdings made plenty of money, most still do. Their OpCo costs got too high, and more importantly their debt payments out of hand considering the decline in real estate values. AK globally claims they make $500MM / year, more likely $250MM total revenue, and the RC itself loses $4MM roughly. Overall, sure - someone could come in and privately manage the homes for the Members, if they could ever get control of them - but at what cost? The dues AK charges are about the lowest in the industry and they can't make it profitable. How would an unorganized group, and how many would throw cash at the problem?
 

Kagehitokiri2

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who cares?

That is the BIGGEST load of BS I have ever heard. Who tells people this information. It's certainly not on the member web, nor was their any offering of the type.

Cap Source...little discretion in how they operate, is modifying secured loan terms for UE, taking an equity position...has to be voted upon and published.

sounded to me like you were calling wilkes591 a liar.

if you have access to member site i presume you are a member.

youre saying he was lied to? wouldnt it be kind of silly for UE to bother making up lies that specific?

or was your point that its a member thats defending UE thats making this up?

The dues AK charges are about the lowest in the industry
:rolleyes:
solstice was $2K/nt but theyre gone. that leaves 2 price levels. ~$1K/nt (most incl AK) and ~$500/nt (hideaways and EE for example) luxus is very little, but thats because its $1MM with no debt, and realistic deposits. also no extras.

when you compare the breakdowns for AK and EE, its nowhere near that large of a difference. EE is adding a management fee when they are full, and AK dues include reserve.

actually that was an interesting thing i did on DC4MS that ended up being deleted.

looking at EE when they add mgmt fee, and if they had maximum debt. >
i think my calculation was something like 7.5% over 10 years, and i got ~$10K per member per year

thats in addition to mgmt fee of ~$3K per member per year

mgmt fee is ~20% increase, and combined they would be almost 100% increase
(i used 7.5% and 10 years for debt, semi-randomly. but this gives a general idea.)

also interesting, not sure i posted yet.
http://www.exclusiveresorts.com/images/BR-YIR2008-01.pdf
(i posted 2009 earlier)
"As of December 31, 2008...secured debt...was approximately $350 million"

"As of December 31, 2009 our $360 million of bank debt"

("secured" > "bank")

others...

http://destinationclubnews.com/News_Ken_MacLean_On_Being_An_M_Private_Residences_Member.php
the club's annual dues paid by members cover all of the club's operations. "Let’s be very clear," Poscente told us last year when the pair departed. "At M, every dollar is covered by the operating costs. Every light switch, every cup of coffee, all the debt, all the salaries, all the sales, sales incentives, referral programs, every freaking dollar is in the annual dues."

http://quintess.com/news/q1_2010/1
Quintess, LRW provides our Members access to our unaudited quarterly financials and our audited annual financials. Between Member dues, occupancy fees and the contracted Series C Investors commitment, we remain stable and sustainable without new sales activity

seem to recall ER claiming the raised dues cover costs, but was that after case put in $20MM? dont recall where they talked about this. probably something in 2009..

thought this was interesting, also in 2009 >
Members desiring more details on club financial operations shouldrefer to the “letters from the club” section of our er compass website.
so thats a positive change if theyre sharing information with members now.
 
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Accept the reality - it appears that others have. Although how anyone in AK (sorry TT) can think they are immune to financial collapse just because they call it an "equity" club is beyond me. Saying AK is the only thing that made money for Intrawest is strange. Intrawest's resort holdings made plenty of money, most still do. Their OpCo costs got too high, and more importantly their debt payments out of hand considering the decline in real estate values. AK globally claims they make $500MM / year, more likely $250MM total revenue, and the RC itself loses $4MM roughly. Overall, sure - someone could come in and privately manage the homes for the Members, if they could ever get control of them - but at what cost? The dues AK charges are about the lowest in the industry and they can't make it profitable. How would an unorganized group, and how many would throw cash at the problem?

I'm not going to pretend that I know everything about every club, but I can tell you about the A&K RC, and I know a good amount about A&K. The A&K numbers are actually much better than you cite. Furthermore, if there is no club manager, the members pick a new club manager. There is no getting control of the houses. The members would have to enter into a new management contract with someone else or affirmatively decide to dissolve. Period. Read the operative documents. Additionally, A&K dues are not about the lowest in the industry, and they should be break even this year, as they have cut costs to do so.

Nonetheless, I can come up with some doomsday or negative scenario about every investment/purchase, so I don't think that anyone can say that a particular choice is immune from financial collapse, including any timeshare, fractional, vacation house, primary residence, whatever. The point is that certain vacation models are clearly less risky than others, just like CDs are less risky than private equity.

Agree on Intrawest that the potential to make money was there, particularly in the real estate hay day, but the debt from the leveraged buyout seems to be killing them, particularly when travel bookings and real estate collapsed at the same time.

CSD - So are or were you a DC member? Or did you work for a DC?
 

wilkes591

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You are correct in re-stating what I questioned, JT and co. raising $10-15M from members by month end. Seems unrealistic. And for the most part unannounced. So, versus questioning "Wilkes," I question who is feeding this BS to these members.


It is called Annual Dues Rebalancing Program, If you are a member in good standing you got the 1st e-mail and the 2nd announcing quick success of the program. I doubt UE can make financial claims that are as unture as you state, since they are public. The amounts are my "guess" based on what I would think average dues are and that it would be mostly non PE members since we have unlimited yearly use. I would say on the very low side it might be 6 million to the high of 15 million. I would bet the target is 10 million.

I am not posting the member e-mail, if someone else wants to go right ahead.

The CapSource information was from another UE member with many years of correct posting on prior DC4M broad.

I am stating what the club is saying it is doing, if you choose not to believe them that is fine with me. The reality to me is I still travel and enjoy the DC travel experience. Some people like the product and hate the financial side, I always looked at the deposit as part of the expense and I go by cost per night including the deposit, annual dues and nightly fees. If UE makes it another two more years, I will be very happy with my return on investment over a six year period. I average 50 days a year the last four years.

I am not saying join UE today, I am just saying with the current economic conditions and what I have been through with PE/UE. I am shocked how strong the active member base supports the club. I think some posters do not realize that most current UE member's are in it for the "Long Haul" since they already have our money. Having 1300 paying members can carry the club for some time.
 

wilkes591

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"You are correct in re-stating what I questioned, JT and co. raising $10-15M from members by month end. Seems unrealistic. And for the most part unannounced. So, versus questioning "Wilkes," I question who is feeding this BS to these members."


It is called Annual Dues Rebalancing Program, If you are a member in good standing you got the 1st e-mail and the 2nd announcing quick success of the program. I doubt UE can make financial claims that are as unture as you state, since they are public. The amounts are my "guess" based on what I would think average dues are and that it would be mostly non PE members since we have unlimited yearly use. I would say on the very low side it might be 6 million to the high of 15 million. I would bet the target is 10 million.

I am not posting the member e-mail, if someone else wants to go right ahead.

The CapSource information was from another UE member with many years of correct posting on prior DC4M broad.

I am stating what the club is saying it is doing, if you choose not to believe them that is fine with me. The reality to me is I still travel and enjoy the DC travel experience. Some people like the product and hate the financial side, I always looked at the deposit as part of the expense and I go by cost per night including the deposit, annual dues and nightly fees. If UE makes it another two more years, I will be very happy with my return on investment over a six year period. I average 50 days a year the last four years.

I am not saying join UE today, I am just saying with the current economic conditions and what I have been through with PE/UE. I am shocked how strong the active member base supports the club. I think some posters do not realize that most current UE member's are in it for the "Long Haul" since they already have our money. Having 1300 paying members can carry the club for some time.
 

Kagehitokiri2

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It is called Annual Dues Rebalancing Program, If you are a member in good standing you got the 1st e-mail and the 2nd announcing quick success of the program.

The CapSource information was from another UE member with many years of correct posting on prior DC4M broad.

If UE makes it another two more years, I will be very happy with my return on investment over a six year period. I average 50 days a year the last four years.

I am shocked how strong the active member base supports the club. I think some posters do not realize that most current UE member's are in it for the "Long Haul" since they already have our money. Having 1300 paying members can carry the club for some time.
CSD - So are or were you a DC member? Or did you work for a DC?

It's certainly not on the member web
if they have access to UE member site, theyre UE member?
 
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AKTHUE

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UE Rabbits

UE's is getting new members writing checks for full deposits.

The rabbit was pulled out of the hat this week, many current member's paid an additional year of annual dues for additional advance reservation days. Looks like the club will raise 10 to 15 million by 03/31/10 on a voluntary basis from willing members. I was not one.

I also hear CapSource will be MODIFING the lending facility for a one time payment on 04/01/2010. The modification has very favorable terms, including an equity position for CapSource in UE.

Say what you want about JT, but somehow he finds a way to keep UE afloat and I can continue to travel and enjoy my PE deposit that I will never see.

I find it unbelievable that UE is signing up any significant number of new members. UE has all kinds of trial memberships right now that let you travel just for the cost of dues, without any deposit. They probably announce those as new members, just like they counted all the suspended members, and temporarily re-instated them and invoiced them just when they were filing their public financials.

Further, I find it impossible that UE has raised $10-15 million from voluntary early dues payments. The entire assessment, which was equal to an extra year of dues, didn't raise $15 million. There is no way the active membership base all prepaid dues - and even if they did, at some point the piper will have to be paid.

Was it UE that threatened to sue DC4Ms to shut them down in order to prevent open discussion among members? Has UE convinced enough gullible members to put up even more money to keep UE alive for another six months? These members love their vacation experience and want to believe that by giving JT a little more money, this uneconomic model can survive. Yes, JT has kept pulling rabbits out of the hat, but having blind faith that he can continue is like investing with Bernie Madoff. UE is built like a house of cards - there are too many gimmicks, there is too much debt, the expenses are too high.

The kind of lender that Capital Source is, they probably got a clear picture that UE could not make a contractual payment, and agreed to modifications in return for additional fees and warrants. They surely didn't give UE a gift. Maybe UE got another 90 days of life before the next potential default.

It is a question of when, not if, UE goes under
 

AKTHUE

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UE Public Information

It is called Annual Dues Rebalancing Program, If you are a member in good standing you got the 1st e-mail and the 2nd announcing quick success of the program. I doubt UE can make financial claims that are as unture as you state, since they are public.

I am not posting the member e-mail, if someone else wants to go right ahead.

The reality to me is I still travel and enjoy the DC travel experience. Some people like the product and hate the financial side, I always looked at the deposit as part of the expense and I go by cost per night including the deposit, annual dues and nightly fees. If UE makes it another two more years, I will be very happy with my return on investment over a six year period. I average 50 days a year the last four years.

I am shocked how strong the active member base supports the club. I think some posters do not realize that most current UE member's are in it for the "Long Haul" since they already have our money. Having 1300 paying members can carry the club for some time.

Wilkes, it sounds like you a realistic view of your UE/PE experience, and what the prospects are. You will enjoy it as long as you can and you don't expect it can continue.

When you say that you "doubt UE can make financial claims that are untrue, since they are public, " I would caution you on a couple of points. Every member has to sign a confidentiality agreement or non-disclosure agreement. My understanding is that the financial regulations would cover what UE says publicly, but would not cover confidential, private communications with members. Remember that these member communications are about paying dues, and not about buying securities. The financial regulations would apply to UE's public statements that are targeted at investors. I think UE fully complies with the truth and letter of the law in their public financial statements.

Having said that, I think that their financial statements are not very transparent and are intentionally confusing and can be misleading. And that it is only a matter of time when the picture becomes clearer and bleaker. And either UE files for bankruptcy or is foreclosed by Capital Source. Capital Source will then have to make a decision whether it is better off selling the properties, which are its primary security, or operating them as a destination club. If the business loses money, they will be better off liquidating the property.

I do think most UE/PE members view their deposits as a sunk cost that they are unlikely to get back, and they like their UE vacation experiences and think the dues represent a good value - so they continue to prop up UE in the hope that it will last another year. At the same time, the business model remains broken and the UE executives pay themselves well. That fat lady hasn't sung yet, but she is warming up.
 

ClubsRDead

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Ah be careful...people here get very sensitive when anyone implies that their club is not healthy.

For the AK tried and true, I suggest you find out the details, from inception, of the Intrawest purchase of AK. Find out where the debt was absorbed, how much and by whom. Tricky maneuvering of stock and ownership rights of AK to Fortress is one thing, but don't fool yourself for 2 seconds thinking that the debt of AK isn't tied up in the Intrawest refinance. And, should the world go all gloom and doom, and Intrawest file, consider the position you would take if asked to provide interim financing during a workout (debtor in possession) if some of the debt you were considering propping up was related to an off the books entity that really has NO assets. Be careful now - you want to come back and say "hey, AKRC has assets, our houses are free and clear." Well, even if I give you that, it's not what I mean. AK global, short of maybe owning some of these homes (which you members really own) doesn't own anything. So, if your assets in the RC are really separate, great - but you just gave me even less incentive to do a DIP with you.

Not to mention - the lawsuit from former TH members. What if some of them win? What if AK has to start forking over checks for payments? That has to come from somewhere? You don't think it would affect the entire AK group of companies, including any services the RC were to receive or have funded?

Let me ask you this - if you own a Toyota right now, and have been thinking about selling it, do you think it's worth as much today as it might have been 2 years ago?

From the UE side, I wholeheartedly disagree that the "members are in it for the long haul because he already has our money." That's hogwash because a majority of those members came from TH and paid no deposits to UR/UE. Another big chunk came from PE and they've already been screwed on redemption rights and that cash is long gone. Not to mention RK has had all sorts of the homes listed on the open retail market. Then throw in the very small number of new members who may have joined in the last year or two (which isn't many based on their own published numbers), and none paid anywhere close to published membership prices - you have to ask, what cash?? They're (the TH majority members) are in it by default, and presumably until JT can give their contractual redemptions back, which was to start in year 5 and go through 8 on a 50-80% of "then market value" scale. Don't kid yourself into thinking that if the cash was available (and sales occurring) there wouldn't be a line around the building. You think ER's redemption list got so big by accident?

No one attacked you Wilkes, nor the credibility of yourself. Only the data. And yes I do have access to the UE website because my family is a member and there is nothing about a special dues deal, nor have any emails been received by us / them and we / they have 2 "good standing" memberships. So it does make your information suspect, but it doesn't mean you weren't given something wrong. Nor does it preclude that what PE legacy members are getting offer-wise isn't different from UR / TH one's, but nor does it preclude that people working for JT don't get on here under pseudonym's and try to make everyone feel all rosy about the "good things coming." It's happened before...
 

Kagehitokiri2

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AKTHUE,

good point re capitalsource being able to foreclose on DCs where they are primary lender.

my take on exec comp is this - rewards are fine if deserved, but if theyre so huge that it impacts survival, that becomes counterproductive.

wasnt assessment ~$10MM from UE and ~$5MM from PE?

ClubsRDead,

i dont recall mention of AK debt in intrawest financials at time. ill go back and look at all of them.

you know AK doesnt own any of these? http://www.sanctuaryretreats.com/
 
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ClubsRDead

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I totally agree with your 2nd posting, as well.

And were the real estate market in a better position today, and those assets secured by CapSource actually worth something that exceed the loan - they might be knocking on that door sooner for a 7. I think everyone has learned and has to wonder now why the TH wasn't handled as a straight liquidation vs a restructuring. Someone could have then, had they wanted to, bought up the assets and let those members come along who wanted too - not who had too, and at realistic market prices. Or, just picked them off one by one and sold them out. It's well proven that the strategy of "this shit will appreciate" didn't work in this model, and more importantly, that the members themselves are worth NOTHING. The only thing a member provides is cash contributions (not capital one's today, no one is buying from anyone) which merely line the pockets of the overpaid exec's at UE.
 

AKTHUE

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Executive Compensation at DCs

my take on exec comp is this - rewards are fine if deserved, but if theyre so huge that it impacts survival, that becomes counterproductive.

There have been academic studies that have shown that in start-up and developmental companies, that investor returns are inversely related to executive compensation. DCs like Private Retreats/Tanner & Haley, High Country Club, and Ultimate Resorts/Escapes are essentially start-up companies run by entrepreneurs who want to become rich and successful. If they take a modest salary, and their big payday comes by creating value in the equity of their company, then everyone's incentives are aligned.

On the other hand, when they pay themselves salaries of $500,000 per year (Rob McGrath did that at PR/T&H, I think Christian Kirschner's payouts were on that order of magnitude at HCC, and JT and RK paid themselves handsomely at UR/PE/UE.) If you read the UE filing for their failed secondary offering, JT somehow has a $10 million loan to UE (meaning UE owes him this much), and he got a $3 million restricted stock grant, in addition to his salary of over $300,000. This level of greed is associated with unsuccessful companies.

Further, the size and complexity of a destination club business simply doesn't warrant $500,000/year compensation packages for CEOs. They may want to be compensated that highly, but the business is not that complex to justify it, and the members are being taken for a ride when their dues are used to fund excessive compensation.
 
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Kagehitokiri2

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its kind of like the thing creditsuisse is being accused of encouraging/facilitating - withdrawing cash from loans as salary.
except with the DC mgmt, they were withdrawing cash from members payments as salary.

http://media.integratir.com/idr/PressReleases/Q2 MDA-FS F2005 v5.pdf
$1.2 million of depreciation and amortization at A&K
http://media.integratir.com/idr/PressReleases/Q3 MDA-FS F2005 F1.pdf
$1.1 million of depreciation and amortization at A&K
http://media.integratir.com/IDR/financials/Intrawest_English_AR2005rev1.pdf
$257.0 million...Revenue at A&K in 2005 increased more than 30% compared with last year
$236.6 million...expenses
A&K...EBITDA...$20.4 million

A&K’s EBITDA in 2005 was augmented by $6.5 million of licensing fees from an operator of destination clubs, who was given the right to use A&K’s brand name for marketing. The licensing agreement terminated in August 2005. While replacement licensing arrangements may be negotiated in the future, EBITDA of $13.9 million from A&K’s tour business is a more indicative base for projecting EBITDA in the future.

interest income in 2005, including $1.1 million earned by A&K
$1.5 million of interest incurred at A&K

Increases in EBITDA of $4.2 million for A&K
http://media.integratir.com/IDR/financials/2006 Annual Report.pdf
A&K...revenue increased by $44.4 million
A&K...added $37.7 million...expenses

A&K realized $1.5 million of licensing fees in 2006, down from $6.5 million in 2005.

EBITDA from A&K’s travel tour business increased by $6.7 million (49%)...The increase in travel tour EBITDA was partially offset by a decrease of $5.0 million in EBITDA from A&K licensing fees due to the termination of the licensing agreement.

$15.2 million cash acquired on the acquisition of 67% of A&K

2005 EBITDA 13.9 (minus .4 net interest) (minus estimated 4.6 depreciation and amortization) (8.9 before taxes)
2006 EBITDA 20.6
 
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ClubsRDead

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Read the fine print, not to mention the numerous, ego-driven and self-gloating articles in the WSJ, Worth magazine, etc - where both Geoff and his son talk about their "never having to work again," how "tough it is to be the son of a multi-millionaire," blah blah. What you will see is that while there was a transaction of some $120-134MM, depending on which account you want to believe, it was merely a transaction - very little cash traded hands. Debt was assumed and $10MM was paid to a loan-shark type investor that Geoff was indebdted too and on the verge of losing everything. The majority was DEBT. It's on someone's sheet - not to hard to figure out who's. True, Fortress might be holding the majority bag on the stock that Geoff doesn't own, but the loans are totally wrapped up in the Intrawest (attempted) re-fi. Combine this with a lawsuit -- you've got an uncomfortable situation. Not one that necessarily can't be overcome - but certainly no one is going to be buying while it's out there unresolved, or especially when JT fails and the whole thing collapses on both sides...
 
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