DC4MS

S.F. company packs $7M homes, yacht for vacation

San Francisco Business Times
by Daniel S. Levine

July 14, 2006

S.F. company packs $7M homes, yacht for vacation - San Francisco Business Times:

It's not easy being rich. There are often difficult choices to make.

Should you buy the $7 million spread in Napa Valley's Rutherford, a 3-bedroom flat featuring a Michelangelo-designed façade in the heart of Florence or a hillside retreat in Cabo San Lucas that features an infinity pool from which you can view sunsets over the Pacific Ocean?

San Francisco-based Solstice wants to eliminate the need for such difficult choices.

The San Francisco company is carving out the high-end of a rapidly growing $2 billion business of luxury destination and residence clubs with a collection of seven homes valued at $5 million to $7 million, and a fully-crewed, 90-foot luxury yacht, which its handful of members exclusively share.

But please don't confuse this with anything as gauche as a timeshare. These are not cookie-cutter condos with hotel furniture, but unique homes individually decorated with fine appointments and made available only for the use of Solstice members.

"It's akin to buying a custom Prada suit compared to buying off the rack at Mervyn's," said Jeff Scult, a partner in Solstice. "These are one-of-a-kind second homes."

The homes include a vehicle for members' use, are staffed with a caretaker and maid and have top chefs and masseuses available.
Boutique bounty

Though residence and destination clubs have been around for about 10 years, the industry got a major boost in 2003 when former AOL CEO Steve Case purchased a 50 percent stake in Exclusive Resorts, the largest player in the industry.

Greg Shove, CEO and founder of San Francisco's Helium Report, an online publication that serves as a Consumer Reports for the affluent, said Solstice has staked out the top of a category that as a whole is aimed at the high end.

"They are a boutique club. They are striving to produce a different experience, which is more intimate, with a smaller number of homes and a smaller number of members," said Shove. "Instead of going for scale and size, they are going for exclusivity and luxury."

Dennis Higgs, CEO of commercial real estate development firm Newcastle Partners in San Francisco, is both an investor in Solstice and a member. He said he toyed with purchasing a second home, but found the benefits of a membership preferable and likens it to getting "together with a bunch of buddies and buying a bunch of houses."

"The experience is as if you own the home and have a private staff," said Higgs. "It also makes financial sense. At the end of the day, you are paying what you would for high-quality hotel."
Join the club

A membership in Solstice works like a country club membership -- it requires a membership deposit and annual dues. The mid-level membership, which allows four weeks' use of the properties a year, requires a membership deposit of $825,000 and annual dues of $39,500.

Solstice plans to limit membership to 42. That not only keeps Solstice exclusive, but also has the potential to raise the value of its memberships through scarcity. It has 36 members now.
'Better mousetrap'

Solstice got its start three years ago out of the frustration of its founder Graham Kos, an options trader turned commercial real estate developer.

Kos, who built a luxurious 6,100-square-foot home in Cabo San Lucas, grew tired of spending his vacation time talking to workers rather than sipping margaritas. He also felt guilty if he vacationed elsewhere rather than using the second home he built.

"I thought there's got to be a model out there that mitigates the downside while still giving people the experience of being home while away in the world's best locations," he said. "This is a way to get access to seven homes plus a yacht without the upfront costs, the ongoing costs and the maintenance issues, or the feeling of being tied to one property in typical home ownership. This is a better mousetrap for how the ultra-high end access and utilize one-of-a-kind, second homes."

Daniel S. Levine covers biotechnology for the San Francisco Business Times.