equity estates fund iii, llc executive summary · standards and managing every detail so you can...

E X E C U T I V E S U M M A R YEQUITY ESTATES FUND I I I , LLC

C O N F I D E N T I A L

D E C E M B E R 2 0 1 7

EXECUTIVE SUMMARY DECEMBER 2017 EQUITYESTATESFUND.COM : : 800.413.33402

Equity Estates was founded over ten years ago and its first

fund successfully raised and deployed over $60 million toward

the purchase of luxury vacation homes owned and enjoyed by

its investor members. Equity Estates’ unique model allows you

to invest in a portfolio of luxury real estate, use the private

residences for outstanding vacations and gain financially

as the properties themselves appreciate. Hence our tag line,

“Appreciating Luxury Residences.”

An additional $30 million was raised into Equity Estates Fund

II, LLC (Fund II) which sold out in December of 2016 and we are

currently raising capital for Equity Estates Fund III, LLC (Fund III).

Investors in any Equity Estates Fund have exclusive access to

a curated portfolio of multi-million dollar residences spanning

over 25 countries around the globe.

Investors need only invest at a level commensurate with their

travel needs. See the chart on page 8 for our most common

investment levels. The portfolio of luxury homes is managed

and maintained by seasoned professionals who anticipate and

cater to your needs. We ensure our investors get the most out

of their vacations by maintaining each property to unparalleled

standards and managing every detail so you can simply enjoy

your vacation to the fullest. We will arrange your travel logistics,

pre-arrival grocery shopping and develop customized itineraries

for you, your friends and loved ones.

Fund III will raise just over $36 million in order to acquire up

to another eleven residences. A typical residence is located

in a sought after beach, mountain, leisure or city destination

convenient to area amenities, attractions, and airports.

Residences vary in cost from $2 million to $5 million and range

from two to six bedrooms and 1,500 to 7,000 square feet.

C O M PA N Y / M E M B E R S H I P H I G H L I G H T S

A N G U I L L A

EXECUTIVE SUMMARY DECEMBER 2017EQUITYESTATESFUND.COM : : 800.413.3340 3

“

“

“A PORTFOLIO OF $2-5 MILLION HOMES AROUND THE GLOBE, PLUS THREE POINTS OF CONCIERGE SERVICE AT YOUR FINGERTIPS.

We want you to feel at home all over the world. That’s why every

room in every residence is perfectly appointed; kitchenware,

spices and other consumables are fully stocked, easing the

burden of travel and accommodating you as if you were

home. Housekeeping is provided daily. Should you wish, we

will arrange for a private chef, a professional masseuse or any

other service you desire. We aren’t just experts in property

management—we know where the locals go to eat, play and

enjoy their surroundings. Whether you want the freshest

ceviche or a nearby charity to volunteer at or perhaps a

recommendation where to catch the most romantic sunset,

we’ve got you covered.

Our devotion to the highest level of service ensures you get the

most out of your vacations without the hassle of planning them

or the aggravation and expense associated with second home

ownership. Because we are professionals in the luxury real

estate and hospitality industries, we have expertise in caring

for homes which will appreciate, and be appreciated. When you

arrive, all you have to do is enjoy.

YO U R C O N C I E R G E A N D H O M E F E AT U R E S

If you would like to be connected with a current investor to discuss Equity Estates, please contact a member of the Investor Relations team by emailing [email protected] or calling 404.445.8501.

We have been investors in Equity Estates since 2008 and it has been a terrific experience. We are investors in both Fund I and Fund II. Having a portfolio of such amazing homes changed the way our family travels. Based on the smart investments I see being made by the fund, I assume that appreciation will ultimately cover a large portion of our vacation costs.

-Poston Family of San Antonio, Texas

I love the fact that EE forces me to slow down and pre-schedule time with my family. Whether it’s skiing or laying on the beach, it’s all time with my wife and kids. At the end of the day, taking the time to plan and schedule yourself while on vacation cheats you of time you would otherwise have with your family. With a teenager at home, I’m suddenly quite aware of how short my remaining time with her will be before she’s gone. It certainly doesn’t hurt that EE residences make family time much more comfortable and luxurious.

-Wu Family of San Francisco, California

The “next” vacation is a common topic of conversation in our household. The experiences we have had with Equity Estates are second to none. From the planning with our concierge to the actual vacations themselves, EE has provided our family with the most memorable times. I would not trade those memories for anything else.

-Picarillo Family of Boston, Massachusetts


PA R K C I T Y

PA R I S


E X P LO R E T H E WO R L D

FUND III WILL INCLUDE UP TO ELEVEN RESIDENCES WHICH COMPLEMENT THE FUND I AND II PORTFOLIOS.

OWN AN EQUITY STAKE IN A DIVERSIFIED PORTFOLIO OF LUXURY HOMES, AND GAIN INSTANT ACCESS TO PRIVATE VACATION HOMES AROUND THE GLOBE.

CURRENT DESTINATIONS

TARGETED DESTINATIONS

EQUITY ESTATES’ CURRENT PORTFOLIO INCLUDES RESIDENCES IN THE FOLLOWING DESTINATIONS:

Visit EquityEstatesFund.com to explore the 60+ residences spanning 25 countries available for investors to enjoy through current portfolio and strategic partnership

properties, including European and Asian destinations.

• Ambergris Caye, Belize

• Aspen, Colorado

• Charleston, South Carolina

• Jackson Hole, Wyoming

• Laguna Beach, California

• London, United Kingdom

• Maui, Hawaii

• Nevis, West Indies

• New York, New York

• Palm Springs, California

• Punta Mita, Mexico

• Riviera Maya, Mexico

• Southern Florida

• St. John, U.S. Virgin Islands

• Vail, Colorado

• Virgin Gorda, British Virgin Islands

• Anguilla, British West Indies

• Beaver Creek, Colorado

• Big Island, Hawaii

• Big Sky, Montana

• Chicago, Illinois

• Deer Valley, Utah

• Florence, Italy

• Grand Cayman, Cayman Islands

• Hilton Head, South Carolina

• Lake Tahoe, California

• Las Catalinas, Costa Rica

• Los Cabos, Mexico

• Napa Valley, California

• New York, New York

• Paradise Island, The Bahamas

• Paris, France

• Park City, Utah

• Playa Langosta, Costa Rica

• Punta Cana, Dominican Republic

• San Diego, California

• San Francisco, California

• Scottsdale, Arizona

• Snowmass, Colorado

• Telluride, Colorado

• Turks and Caicos

• St. John, USVI

• Watersound Beach, Florida


Capital contributions are invested as prescribed by the private

offering memorandum and operating agreement of the

company which dictates how capital contributions will be used

to acquire and appoint residences. RSM (formerly McGladrey),

ranked the fifth largest assurance, tax and consultancy,

conducts full comprehensive audits each year. Each investor

rests soundly knowing there are thorough checks and balances

that are audited and reviewed every year.

We underutilize the portfolio intentionally to offer the best

availability in the industry. Investors never compete with third

party renters for their stays. We believe this compromises access

and usage for little gain not to mention the added wear and tear

by non owners. The sound Equity Estates model that has had

success for over ten years is designed with the utmost emphasis

on alignment between the investors and fund management.

We plan to initiate the sell-off plans for Fund III properties in

2029, all net proceeds are first distributed to Investors until they

receive back 100% of their investment and then 80% of proceeds

thereafter. Pending the portfolio’s performance, there’s a

chance you will be “paid” to vacation in these luxury residences.

I N V E S T M E N T H I G H L I G H T S

Over ten years ago, the Equity Estates’ model redefined the

industry standard with true equity ownership where savvy

investors can own and enjoy a portfolio of luxury residences

in the most sought after world-wide destinations. Thousands

of once-in-a-lifetime vacations and trip experiences have been

enjoyed by families invested in our funds. In fact, in 2017 we

delivered our 10,000th memorable vacation.

When you become an Equity Estates investor, your vacation

dollars go to your vacation fun and to your luxury residence

fund. We relieve you of the burden of cramped hotel stays or

inconsistent and expensive home rentals, you have no property

upkeep worries and don’t individually bear the costs associated

with second home ownership. Other vacation alternatives

rarely include true equity ownership as our fund does, nor do

they typically offer one-on-one personalized travel planning

and concierge services. Our level of service and attention to

detail truly makes traveling to your portfolio of homes hassle-

free and memorable.

We are committed to the strict use of proceeds, to sound

corporate governance and to constant communication with

our investors. Key elements of the Equity Estates governance

model include: annual audits by RSM, the nation’s fifth largest

provider of assurance, tax and consulting services; alignment

between investors and management; advisory from our Investor

Steering Committee and explicit use of funds as outlined in our

Private Offering Memorandum.

Why obligate yourself to a single vacation home destination?

Investors have a growing selection of unique luxury homes that

are easy to access and expertly located all over the world. The

residences are intentionally underutilized with vacancy ratios

over 40%. This provides investors with unparalleled access

compared to destination or travel clubs that were invented

to put ‘heads in beds’ and to increase competition for the

inventory they manage—most of which they don’t own but

lease, causing ever-changing and uncertain inventory.

E Q U I T Y E S TAT E S A DVA N TAG E

C O S TA R I C A TO SEE ALL OF OUR DESTINATIONS , V IS IT: EQUITYESTATESFUND.COM


RENTAL

$1 MM

$447k

8%

$246*

$669k

10%

$817*

$947k

12%

$1527*

$13k

2%

$866**

$126k

4%

$576**

$268k

6%

$212**

INVESTOR LEVELS

EQUITY ESTATES COST/GET PAID TO TRAVEL CONTINUUM

INVESTOR TYPEALLOTTED NIGHTS

CAPITALCONTRIBUTION

ANNUALCOSTS

The Advantage Membership Level 45 Nights $692,500 $40,500

The Elite Membership Level 30 Nights $475,000 $27,000

The Executive Membership Level 15 Nights $257,500 $13,500

These figures represent the profit prorated over all nights of travel

Compared to spending $2,250 per night, these figures represent the net subsidized cost per night of travel.

Total cost to rent similar homes over lifetime of Fund

if you did not invest in EE

Final Returns offset some annual costs over life of fund

Total cash from EE Return on Investment

TRAVEL WITH EQUITY ESTATES IS SUBSIDIZED GET PAID TO TRAVEL WITH EQUITY ESTATES

This illustrates the potential portfolio appreciation impact on the

pro-rated nightly costs to an investor. The Operating Agreement

calls for net proceeds to be distributed such that each investor

recoups 100% of their original capital contribution and 80% of

profit thereafter. In some scenarios, the return of capital to an

investor is sufficient to cover each years’ costs and profit taking.

**

*

PORTFOLIO APPRECIATION

T U R K S & C A I C O S TO SEE ALL OF OUR DESTINATIONS , V IS IT: EQUITYESTATESFUND.COM


INTERNAL RATE OF RETURN ON A $3 M ILL ION INVESTMENT

INVESTMENT COMPARISON

INVESTMENT COMPARISON2ND HOMEPURCHASE

VACATION HOME RENTALS &

STOCK MARKET INVESTMENT

EQUITY ESTATES INVESTMENT & STOCK MARKET

Equity Estates Stock Market

Investment $3,192,000 $3,192,000 $475,000 $2,717,000

Annual Costs/Rental Costs $95,000 $67,500 $29,000 —

Annual Usage (nights) — 30 30 —

Appreciated Value - Year 13 $8,172,839 $8,172,839 $972,957 $6,956,642

Agent Commission/Carried Interest $490,370 — $58,377 —

Sale Proceeds $7,682,468 $8,172,839 $914,580 $6,956,642

Less: Investment $3,192,000 $3,192,000 $475,000 $2,717,000

Net Proceeds $3,255,468 $4,103,339 $439,580 $4,239,642

IRR 4.03% 5.08% 6.52%

Vacation Considerations

Destination Variety No Yes Yes

Three Points of Concierge Service No No Yes

Local Host (Destination Concierge) No Maybe Yes

Housekeeping No Maybe Yes

Hassle Free Booking and Professional Mgt No Maybe Yes

Investment Considerations

Diversified Portfolio / Risk No Yes Yes

Liquidity No Yes Yes

The below analysis illustrates the results of investing $3 Million

under various scenarios. The results conclude that investing

$3 Million in a combination of the Stock Market and an Equity

Estates Membership Interest provides a superior Internal Rate of

Return than either purchasing a $3 Million vacation property or

investing all $3 Million in the stock market and renting homes for

vacations, when using a 7.5% home and stock market appreciation

assumption. We also assumed a $2,250 nightly rental rate inclusive

of local taxes and accommodation fees even though our homes

would often retail for more. In the Equity Estates choice, superior

economic return is then coupled with superior service and

investment considerations.


TA R G E T E D E Q U I T Y E S TAT E S F U N D I I I D E S T I N AT I O N S

VAIL, COLORADO

CHARLESTON, SOUTH CAROLINA

NEW YORK, NEW YORK SOUTHERN FLORIDA

JACKSON HOLE, WYOMING

AMBERGRIS CAYE, BELIZE ASPEN, COLORADO

LONDON, UNITED KINGDOM MAUI, HAWAII

VIRGIN GORDA, BRITISH VIRGIN ISLANDS

RISK OF INACCURACY OF PROJECTIONS AND OTHER FORWARD-LOOKING STATEMENTS

This summary contains projections and forward looking information and statements. It can be anticipated that some or all of the assumptions

underlying the projections and forward looking statements included herein will not materialize or will vary significantly from actual results.

REQUIRED DISCLOSURES

(i) The securities may be sold only to “accredited investors,” which for natural persons are investors who meet certain minimum annual income or

net worth thresholds; (ii) The securities are being offered in reliance on an exemption from the registration requirements of the Securities Act and

are not required to comply with specific disclosure requirements that apply to registration under the Securities Act; (iii) The Commission has not

passed upon the merits of or given its approval to the securities, the terms of the offering, or the accuracy or completeness of any offering materials;

(iv) The securities are subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell their securities;

and (v) Investing in securities involves risk, and investors should be able to bear the loss of their investment. The securities offered are not subject to

the protections of the Investment Company Act.

Equity Estates Fund III is a Luxury Residence Fund offering a diverse

portfolio of vacation residences for the private use and financial benefit

of its members who own an equity interest in the portfolio. Investors

enjoy the unique dual benefits of vacationing at some of the world’s

most desirable beach, mountain and metropolitan destinations, while

also participating in any appreciation on fund investments.

EquityEstatesFund.com 800.413.3340

PHONE EMAILWEB

[email protected]

60+ PRIVATE RESIDENCES

25+COUNTRIES

PERSONALCONCIERGE

FULL TRANSPARENCY

ALIGNEDINTERESTS

DEFINEDLIQUIDITY

ESTABLISHEDTRACK RECORD

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