Insights from Equity Residences Managing Director, Greg Salley

Equity Residences continues to expand its portfolio of luxury vacation residences while introducing new fund opportunities for investors. Equity Residences enables investors to own a diversified portfolio of vacation homes for personal enjoyment and investment returns. The homes are professionally managed with a defined liquidation after 10 years. SherpaReport sat down with Founder and Managing Director Greg Salley to discuss the company’s latest results and new investment opportunities.

Liquidation of First Fund

Greg reported the Villa Fund, Equity Residences’ first fund, is in its liquidation phase. The Equity Villa Fund launched in 2012 and sold out in 2016, initiating a planned 10- to 12-year holding period. Equity Residences acquired 11 homes and has sold 6 to date. It is tracking toward a 1.5X return on capital and delivering a double-digit IRR, driven by the significant value of rent-free investor vacations and portfolio appreciation. The six homes that have been sold had an average investment of $728,024, including purchase price and upgrades, and an average sale price of $1,967,837, resulting in a net increase in value of 121.9%. Investors also enjoyed years of rent-free vacations.

New Funds

While it continues to work through the sales of homes in its first fund, Equity Residences is now focused on its two active funds: the Equity Platinum Fund 2 (EPF2) and the new Equity Euro Fund (EEF).

Equity Platinum Fund 2 recently expanded into two new U.S. destinations, with homes in Terranea Resort in Rancho Palos Verdes, California and Montana’s Big Sky Resort . These homes highlight the caliber of residences being added to the Fund portfolio that combines lifestyle rewards with financial returns.

The Euro Fund targets exceptional European residences. Greg said this fund quickly attracted a strong group of Founding Partners that includes Equity Platinum Fund 2 investors. Currently, the Euro Fund is offering Charter Investor units. Greg noted that interest has been significant, not only from Equity Residences’ repeat investors but also from first-time European investors.

Equity Residences’ second fund, the Equity Platinum Fund, is fully subscribed. New investors drawn to Equity Residences’ innovative business model can participate in one or both of the new funds that are building on the success of the predecessor funds. In fact. About 15% of Equity Villa Fund investors went on to invest in the newer funds.

We sat down with Greg Salley and asked him the following questions.

What makes the new Euro Fund different from your prior funds?

Greg: Our previous funds acquired homes that were mostly in the U.S., Mexico, Central America, and the Caribbean. The Equity Euro Fund was launched in response to strong investor demand for more European destinations. We are targeting €33 million to acquire 12 residences in iconic locations that include: Lake Como, Tuscany, Sardinia, and the Dolomites in Italy; Bordeaux, France; Dubrovnik, Croatia; Algarve, Portugal; San Sebastian, Spain; Nice/Cannes, France; and; Innsbruck, Austria.

What is the target price for Euro Fund homes and what is the investment amount?

Greg: Homes will generally be in the €1.5 million to €3 million range.

As with all our funds, the Euro Fund offers investors a diversified, debt-free portfolio designed to deliver memorable lifestyle experiences and long-term real estate appreciation. Unlike timeshares or destination clubs which are subject to resale restrictions, have high annual fees, and provide no real estate equity, the Euro Fund provides deeded ownership of real estate assets. To offset operating expenses and reduce carrying costs, Fund homes are rented to high-end travelers when not in use by investors.

The Equity Euro Fund investment starts from €239,500 for accredited investors. The Fund also offers incentives for early investors.

In addition to ownership of European luxury homes, Euro Fund investors gain access to rent-free vacations in residences from other Equity Residences funds. This includes stunning residences in Mexico, Costa Rica, Belize, Anguilla, Italy, Spain, Greece, the Bahamas, Turks & Caicos, Dominican Republic, the Virgin Islands, and multiple beach, urban, and mountain locations in the U.S. Because the homes have three to six bedrooms, there is ample space for family and friends to enjoy together.

The value of the rent-free Euro Fund vacations during the ten-year hold period provides a significant return on investment, independent of the low-risk real estate investment returns. Additionally, the vacation usage is tax-advantaged, reducing the amount of taxable income used to pay for travel.

Why did you add Terranea Resort to Platinum Fund 2?

Greg: Our current West Coast investors were asking for an easily accessible luxury home location. Terranea is a world-class resort in Rancho Palos Verdes, California. Our villa there combines Mediterranean-inspired architecture with sweeping ocean views of the Pacific and Catalina Island and includes access to all of the resort’s amenities. It’s the sixth home in a planned portfolio of 16 luxury residences for Equity Platinum Fund 2..

Terranea checks a lot of lifestyle boxes: short drive from Los Angeles and LAX; close proximity to Southern California’s top attractions, from wine country and Malibu to Beverly Hills shopping and cultural landmarks in downtown LA; great resort services and facilities like spa treatments, oceanfront dining, a picturesque golf course, and scenic coastal trails. From an investment perspective, luxury estate along the Southern California coast has historically held strong value, with limited availability and sustained demand.

What made Big Sky, Montana an attractive acquisition?

Greg: Big Sky has been on the radar of luxury travelers and investors for several years now. You’ve got Big Sky Resort, one of the largest mountains in North America, and proximity to Yellowstone National Park which drives year-round visitation. The combination of winter sports and summer adventure is rare, and it positions Big Sky as more than a one-season destination.

For our investors, that means incredible lifestyle value and sound portfolio diversification. They can enjoy world-class skiing in the winter, biking, hiking, and fly fishing in the spring, summer and fall. We are confident this luxury home will be enjoyed by our investors and prove to be a smart financial decision.

How does Equity Residences balance lifestyle with investment returns?

Greg: I think it’s important to remember that the value of the amazing, rent-free vacations our investors enjoy represents a very significant return on investment, in addition to real estate appreciation. Also, by renting homes to high-end travelers when not in use by investors, we offset operating costs and provide the option of no annual fees. Additionally, a portion of the renters become investors, and this reduces our partner acquisition costs.

Our investment strategy focuses on: destinations that appeal to affluent families. We are able to acquire homes at attractive prices because we are a cash buyer that can close quickly. Also, we are skilled in making value-add renovations where needed and identifying markets that deliver rental rates that minimize annual investor fees.

What’s next?

Greg: Beyond acquiring world-class residences like Terranea and Big Sky, our focus is on enhancing investor and rental guest experiences. That means creating access not just to beautiful homes, but also to memorable activities like private excursions, local cultural events, and the best dining and shopping options through our concierge service, while addressing any special needs. We will be enhancing fund values as we expand the portfolio into other spectacular locations and curating unique experiences that make every stay unforgettable. Quality family time is more precious than even the most expensive real estate.