Gold Gate real estate investment management has announced Fund I of $100 million taking aim at the luxury segment. According to the news, the fund aimed at HNWIs, families, and institutions, will afford each investor one percent ownership interest and 45 days of annual use in 20 exclusive properties around the world.
The fund managers will raise a total of $100 million backed by 100 shares for each accredited investor. Gold Gate will use the capital to acquire 20 luxury properties at destinations like Pebble Beach, Ibiza, Hawaii, Aspen, the Hamptons, and so on. Dalton Skach (above), CEO of Golden Gate elaborated in a press release about the inaugural fund:
“The average value of each property in the fund is over $5 million and will be exclusively offered to 100 accredited investors with an investment of $1 million each.”
Golden Gate’s proven model is to provide investors with equity in vacation homes around the world via a kind of high-end Club Med strategy. This fund offers investors the opportunity to join an exclusive club of the wealthiest individuals and institutions in the world, diversify their investment across geographies, and produce a financial return when the properties are sold.
The long-term plan is to sell these luxury digs after 10 to 15 years with investors netting their share of profits over and above their initial investment.
According to the news, Gold Gate also has more funds planned that will leverage specific lifestyles and locations. After the successful syndication of this fund, Gold Gate intends to syndicate four more funds next year totaling $1B. These funds will range between $100M and $500M with a minimum investment between $1M and $5M.
Sketch also pointed out other key benefits of high net worth investors buying in. Other than the flexibility and the diversification of their investment portfolio, the Gold Gate CEO says maintenance-free living and lower costs are additional benefits of 1% fractional ownership.
For readers unfamiliar with fractional real estate ownership, the trend is not a new one. Timeshares, which provided an alternative to whole ownership of a vacation property, were all the rage throughout the 70s, 80s, and into the 1990s. While the popularity of such investments tailed off for a time, during the 2000s the segment grew to be a $10.2 billion dollar industry. This is, however, the normal segment and not the high-end luxury market.
One advantage of fractional ownership, as opposed to a traditional timeshare, is, your share of the real estate rises as the value of the home rises with the market, just like whole ownership. To learn more, there is good general information available at Motley Fool here.