SAN MARCOS, CA (June 11, 2015) — Welk Resort Group, Inc. announced today that it closed a $129.6 million dollar securitization backed by notes receivable from vacation owners. Welk Resorts develops, operates and manages four-star quality vacation ownership resorts throughout the United States and Mexico for 50,000 timeshare owners. There are currently five resort locations in Cabo San Lucas, Lake Tahoe, San Diego, Palm Springs and Branson, and two additional locations planned for future development in Breckenridge and Kauai.
The securitization allowed the company to refinance a portion of its warehouse facilities with existing commercial lenders, creating a fixed low-rate cost of funds for the term of the securitization. The transaction has also provided additional capital for the company, which will aid in the future development of Welk Resort properties.
“Completion of this securitization will ensure growth capital for our company moving forward,” said President and CEO Jon Fredricks. “We are excited to expand into other top vacation destinations for our new and existing owners, including Breckenridge, Colorado and Poipu, Kauai.”
The securitization was rated by both Standard and Poor’s and Kroll Bond Rating Agency. The offering featured two classes of notes, with the senior note class receiving a rating “A (sf)”, and the subordinated class of notes received a rating of “BBB+ (sf)”. The initial outstanding principal balance of the senior and subordinated classes of notes are $117.788 million and $11.812 million, respectively, with note coupons of 2.79% and 3.28%, respectively. Blended pricing reflects a long-term coupon of 2.83%, at an advance rate of 96%.
BB&T Capital Markets served as Structuring Agent, Joint-Bookrunner and Co-Lead Manager on this transaction, and Bank of America Merrill Lynch as Joint-Bookrunner and Co-Lead Manager. Capital One Securities, Inc. and Deutsche Bank Securities also served as Co-Managers.
Currently, Welk Resorts services a notes receivable portfolio of approximately 18,000 loans made to vacation ownership purchasers, totaling almost $300 million. Loans are generally made for 10 to 15 years.
“This transaction reiterates the strength of our business and consistent company growth, the superiority of our resorts, and our focus on the guest experience resulting in a quality notes receivable portfolio,” said Carisa Azzi, Senior Vice President and CFO. The investor base on this transaction consists of 9 institutional investors participating in the purchase of the underlying bonds.
Welk Resorts has spent more than 50 years providing superlative service in the hospitality industry. In 1964, legendary bandleader and television celebrity Lawrence Welk bought a remote 900-acre parcel in Escondido, California, 30 miles north of San Diego. The property was later converted to a timeshare resort in 1984.
The first property, Welk Resorts San Diego, is located in Escondido situated on 450 lush acres, and surrounded by breathtaking views of the mountains. The property offers an abundance of amenities, including more than 700 villas, eight pools, waterslides, spas, interactive splash zones, par-3 and Executive golf, Foot-Golf, tennis, sand volleyball courts, award-winning live theatre, restaurants, stores, expansive recreation centers, and many activities for the entire family to enjoy.
Over the years, Welk Resorts purchased and built other high-end resort properties including 162 units in Cathedral City, California (near Palm Springs) and 56 villas and 159 hotel rooms in beautiful Branson, Missouri. In 2009, Welk built and opened the luxurious Sirena Del Mar. Perched on the cliffs of the Cabo San Lucas peninsula; Sirena Del Mar boasts seven acres of luxurious amenities overlooking the iconic Los Arcos with a view of the Sea of Cortez. In 2014, Sirena Del Mar was awarded Expedia’s Insiders’ Select Award.
Northstar Lodge, a 34-unit resort in North Lake Tahoe at Northstar Village, is the newest addition to the Welk Resorts family of resorts. This property is in a Gondola-on, ski-off location, and currently has an additional 35 units in development. In early 2013, Welk also purchased 6.5 acres on the Blue River in Breckenridge, Colorado, with plans to build 123 luxury units by 2016, as well as 21.45 acres in Poipu, Kauai, with plans to build 164 units by 2018.
Welk Resorts delivers impeccable quality and variety whether travelers are booking a timeshare or hotel rental. For more information call 760-749-3000 or visit, www.welkresorts.com.
PRESS RELEASE SOURCE: Welk Resort Group
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