Destination club M Private Residences has made some key changes to its pricing, structure and membership plans. This includes introducing a secondary market for membership share sales.
M Private owns 17 homes around the world with an average value of about Can$2m each. The 145 members of this equity destination club are also the shareholders of the company which both owns and manages the homes. The club originally had a sister management company, Teger Resorts, which has now been absorbed into the club in order to keep the overall management costs low in the current economic environment.Share Price Down
The club has seen a drop in the average value of its homes and so has also lowered the share prices. These are the prices that members pay to join the club. For instance the A shares were at C$250,000 and are now C$210,000, the C shares were at C$485,000 and are now C$420,000. These are still higher than the original prices when the club launched back in 2005.Annual Dues Cover Operations
At the same time the club has raised its annual dues to make sure that these fully cover the clubs ongoing operating expenses. In the current economy this is very sound management and ensures the strength and viability of the club. The current shares classes are summarized below.
|Membership Fee|| C$210,000 || C$295,000 || C$420,000 |
|Annual Dues|| C$16,650 || C$27,750 || C$32,750 |
|Nights Included|| 21 || 42 || 60 |
|Long Term Reservations|| 2 || 4 || 5 |
|Short Term Reservations|| 1 || 2 || 2 |
Secondary Market For Shares
The biggest change is that the club is now going to effectively create a market for its shares and allow members to sell their shares on a "1 in 1 out" basis. Up until now the club ran on a "2 in 1 out" model for new memberships.
When members want to resign from the club they join the resignation list. Prospective members can put in an offer for the class of share they want to buy, at whatever price they want to name. The first person on the resignation list, with that share class, can decide whether they want to accept the offer. If the first person on the list decides the offer is too low, then the second person on the list can decide if they want to accept the offer, and so on down the list. If no-one on the list accepts the offer, then the prospective member can decide if they want to raise their offer and the process starts again. Don't you just love market driven economies.
As the club sells new shares and grows its membership, it will be putting 93% of the capital raised into new home purchases. This is the highest proportion of initial dues going into real estate that we've seen amongst destination clubs.Management Changes
Accompanying all the above, the two founders of M Private Residences, Paul Poscente and Ken MacClean, are stepping down from their management roles. Both are staying on as members of the club. The clubs board is now fully made up of shareholders of the club.