The members of the Canadian based equity destination club just voted to add in a sunset provision. This means that starting in 2020 the club can sell off its residences and return funds to members.
If there are sufficient members who wish to stay in the club in 2020, the new provision would allow continuance of the club for those members for a further 10 year period. For those opting to liquidate in 2020, a pro-rata share of the properties would be sold to fund the redemption.
In addition to the above, any members who wish to leave the club before the sunset date, have the ability to find his/her own buyer. M Private Residences will facilitate the transfer under the existing provisions in the rules.
"A Sunset Provision will provide liquidity to our members and at the same time, provide the basis for reduced annual member dues," said John Beckel, General Manager of M Private Residences.
Prior to this change, M Private Residences was set up to carry on effectively for ever. So the members now have a more finite lifetime for their investment in the club and a definite exit strategy built into the club documents.
Other clubs such as Rocksure in the UK and Equity Estates in the US also have finite end dates built into their models. In each of these cases the structure is very similar to the change just enacted by M Private. In other words as a member you can join knowing that your funds will be returned, with appreciation or depreciation, depending on how the real estate values have performed.