Second Homes 411

PIERCE GROUP ALLIANCE OFFERS LIFELINE TO AILING
CONDO HOTEL LENDERS AND DEVELOPERS
PICKENS, SC (October 9) – Pierce Group, LLC and Vacation Finance today
announced the formation of a strategic alliance to provide comprehensive conversion
services to distressed developers and lending institutions with unsold condominium and
condo hotel inventory.  With expertise in fractional ownership finance, marketing, sales
and operations, the alliance helps faltering projects regain their footing.
While the real estate market has slumped across the board, condo hotel projects
have been especially hard hit by a decrease in buyer interest as dreams of big
investment returns have fizzled, and an increase in developer concern as class action
lawsuits form to address alleged SEC violations in the industry.
“Developers and bankers now are scrambling to find ways to turn what unfortunately
have become white elephants into profitable projects,” said Eric Pierce, CEO of Pierce
Group, a consulting firm specializing in the design, sales and marketing of private
residence clubs and fractional ownership developments.  “For many, fractional
ownership may be the answer.”
Luxury second home properties are one of the few growth sectors in today’s
unsettled real estate market.  According to the “2008 Annual Fractional Interest Report”
by NorthCourse® Leisure Real Estate Solutions, high-end luxury fractional real estate
sales surpassed $1.9 billion in 2007 in the U.S., Canada and the Caribbean, up 18
percent from 2006.
Fractional ownership – especially private residence clubs – offers distinct
advantages to developers and buyers, according to alliance member Bob Waun, CEO of
Vacation Finance, specializing in second-home commercial financing for developers and
innovative mortgage solutions for buyers.  According to Waun, even in a down market
buyers are attracted to residence clubs because of the lower upfront and annual costs
and desirable resort locations.  “But developer beware,” said Waun.  “A great opportunity
can’t survive a misguided concept.”
According to Waun, not every project is right for fractionalization, and few developers
understand the intricacies well enough to make them succeed.  The alliance was formed, he said,
to offer developers and lenders the expertise to assess success potential.  Using data assembled
from both thriving and failed fractional and condo hotel projects throughout the U.S., the team
designs the private residence club structure, the financing model and the sales and marketing
approach to match the unique project needs.
“With capital harder to come by, credible projections and the proper capital structure
are critically important,” says Kevin Stolz, of Vacation Finance.  Stolz
will provide detailed financial analysis support to the alliance and recommend additional
capital outlets and capital structures where needed.
The alliance also provides banks with receivership services.  Real Estate Receiver
Dennis Heck, owner and operator of U.S. Coastal Development, LLC, has joined the
alliance to provide lenders with a simple and streamlined process to convert their
fledgling condos into fractional ownership properties.  “Understanding current market
conditions as well as future market trends is key to being a qualified real-estate
receiver,” said Heck.  “Protecting the lender’s collateral and putting into place solid
business and marketing plans to retire the debt also are essential. This is where a well-
organized professional team is critical.”
According to the alliance members, the goal is to offer developers the resources to
implement a conversion plan as efficiently and cost effectively as possible and get sales
phones ringing again.
“Pierce Group is now able to provide the fractional industry’s most comprehensive
suite of services — from feasibility analysis and financial models to recommended capital
structure, consumer financing, development financing, sales and marketing” said Pierce.
“Everything a developer needs is under one collective roof.”
—For more on Pierce Group, LLC visit:  www.PierceGroupConsulting.com
—For more on Vacation Finance and Kevin Stolz visit: www.Vacation-Finance.com
—For more on U.S. Coastal Development, LLC. visit: www.RealEstateReceivership.com