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SONOMA RANCH

Fractional Ownership

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Sonoma Ranch includes a 4,746 sf. main residence, a separate 540 sf. guest suite, and a 720 sf. wine cave. And it’s all situated on 11.5 acres of premium vineyard property in the middles of California’s most exciting wine country.

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Fractional Ownership Vacation Estate

About 80% to 85% of fractional buyers pay cash for shares of Timbers Resorts, says CEO David Burden. Wanting to keep their cash in high-yield investments, the Stearns opted for a mortgage, declining to disclose the amount. They made a 30% down payment and financed 70% with a mortgage through Mountain Valley Bank, a local lender that has a relationship with Timbers Resorts. The Stearns got a five-year balloon mortgage with a 5.75% interest rate, which could change if not paid off in five years. "We plan to have it paid off," Ms. Stearns says.

Like jumbo-mortgage financing, fractional mortgages dried up during the recession and are hard to find, says Dustin Carfield, executive vice president of San Diego, Calif.-based One Trust Home Loans, another Timbers Resort partner. As a result, buyers are generally limited to seller financing or loans through developer relationships with a local bank, he adds. The banks hold these loans on their books, since the mortgages don't conform to Fannie Mae FNMA -4.07% and Freddie Mac FMCC -3.56% guidelines.

More ways to finance a fractional purchase when a mortgage isn't available:

• Seller financing. Timbers Resorts offers short-term, no-interest loans at some of its properties. Its Vail, Colo., development, the Sebastian, has a loan program with either a 24-month or a 36-month term and requires a 40% down payment. Buyers also pay an administrative fee of 2% of the loan amount.

• Primary home equity. Fractional buyers may wish to consider a cash-out refinance or home-equity loan, Mr. Carfield says. Average annual interest rates were 4.16% for a 30-year, fixed-rate jumbo mortgage, and 2.97% annually for a five-year adjustable rate mortgage as of the week ending Aug. 22, according to HSH.com.

• Consumer loans. Some private lenders offer unsecured loans that can be used for vacation ownership. At Lightstream, the online-lending division of SunTrust Bank, STI +0.71% vacation-home loans account for 3% to 5% of its loan volume, says Todd Nelson, Lightstream's business-development officer. Lightstream currently offers these personal loans at an annual percentage rate of 5.99%, with terms up to seven years. The loans have no closing costs or prepayment penalties, but amounts only go up to $100,000.

After doing the math, some homeowners are set on fractions.

On a trip to affluent ski town Steamboat Springs, Colo., in March, Dennis and Pamela Stearns discovered One Steamboat Place, a Timbers Resorts development that offers fractional ownership of luxury vacation properties. The couple, whose primary home is in Greensboro, N.C., were intrigued by the thought of a second home without the maintenance hassles. Fractional ownership with Timbers Resorts also enables the Stearns and their two young daughters to stay in luxury properties elsewhere. "We didn't want to feel like we had to go to the same place all the time to justify having it," says Ms. Stearns.

Fractional real-estate ownership differs somewhat from timeshares. It typically applies to high-end properties, and ownership is split among fewer people. Periods of annual usage are typically three to four weeks rather than one to two, and privileges may extend to more than one luxury property. Another draw is concierge-level services that a guest would receive at a luxury hotel.

Like deeded property owners, fractional owners can sell their stake, leave it in a will or put it in a trust. Fractional owners pay a share of property taxes as part of their annual dues, ranging from $8,100 to $21,000, depending on the property, which also covers their concierge services and utilities. Some borrowers are able to write off mortgage interest on their taxes. On the down side, owners who want to make changes to the property are limited.

A number of other U.S. companies and developers offer fractional ownership, including Four Seasons, Fairmont and Ritz-Carlton, and their terms and requirements vary. Under the Stearns' contract with Timbers Resorts, for example, the family can spend four weeks annually at One Steamboat Place. They can also arrange to spend additional time or trade time to visit any of the company's 14 properties in Arizona, California, Colorado, Florida, Hawaii, as well as Tuscany in Italy, Cabo San Lucas, Mexico, and St. Thomas in the U.S. Virgin Islands. "It's like having multiple second homes," says Dennis Stearns, president of Greensboro, N.C.-based Stearns Financial Services Group. Pamela Stearns is director of financial focus for women at the firm.

A share at a Timbers Resorts property ranges from $310,000 for a one-tenth share of a two-bedroom wine cottage at the Orchard at the Carneros Inn in Napa, to $850,000 for a one-twelfth share of a farmhouse on the grounds of Castello di Casole, a restored castle in Tuscany.

Wall Street Journal, Aug. 31, 2014

Buyers Who Divide and Conquer

  1. Fractional ownership allows second-home buyers to purchase a more luxurious and valuable property at a fraction of the cost.  Owners also avoid the hassles of maintenance and management.

     

  1. Contact Brad Cameron: P. 202-422-4999.

Wall Street Journal, Sep. 3, 2015

Companies Convert Grand Estates Into Corporate Retreats


Companies are buying large estates with ample acreage and converting them into corporate retreats for networking, brainstorming—and a little quail hunting.



Executives are looking for retreats that are real investments, which has fueled sales of luxury homes with ample acreage.



Pete Claussen, founder of Knoxville, Tenn.-based Gulf & Ohio Railways, wanted a place where he could network, brainstorm and schmooze with employees and clients. But instead of booking a hotel in downtown Knoxville—a typical venue in past years—Mr. Claussen bought an 11½-acre estate in Huntsville, Tenn.


The property, once owned by longtime senator and Ronald Reagan’s chief of staff Howard Baker, has a 6,800-square-foot main house, a glass garage set up as a game room and open land that backs up to a bluff overlooking the New River tributary to the Big South Fork National River.

“Now we have the opportunity to do lots of things outdoors, which is better for everybody,” says Mr. Claussen, who paid about $700,000 for the property at auction in June. This weekend, Gulf & Ohio Railways is hosting its first event, a gathering of about 50 people that includes the company’s senior executives and their families.


Mr. Claussen’s purchase reflects the comeback of the corporate retreat. In a departure from the getaways of the go-go years—with lavish spa treatments, free-flowing alcohol and A-list entertainers—today’s executives are taking a more practical approach. Buying a luxury estate with ample acreage and converting it into a company’s Camp David can be more economical than leasing posh properties in exotic locales.


In years past, Mr. Claussen says his high-end events reached up to $50,000 over two days, while smaller retreats cost him $6,000 to $8,000. He expects the costs to drop now that he owns the retreat.


In December, Jon Kohler, a real-estate broker in northern Florida who specializes in plantations and ranches, sold a 1,268-acre quail-hunting plantation called Oldfields to Southern Fidelity Insurance for $5.7 million. In addition to the 6,881-square-foot home, the plantation that’s 15 minutes east of Tallahassee includes multiple quail courses and bird dogs, horses, a guesthouse, two floodable duck ponds and bass-fishing lakes. CEO James Graganella says his company bought Oldfields to “do company retreats, employee horseback riding, board meetings and for investment value.”


Former Cisco executive Ed Kozel, who has advised a number of tech startups, has hosted retreats at his private estate and ranch in Sonoma County, Calif., as a way to “get people out of the rat race and into an area where they can focus on teambuilding and strategy off-site,” he says. Located less than two hours from San Francisco, the property has a 12,000-square-foot main home, complete with a wine cellar, library and kitchen floor made from 19th-century Austrian brick pavers. The property includes 100 acres of hiking trails, two barns that are used for function space, an exercise studio and tennis court.

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To facilitate productive gatherings, Mr. Kozel recommends the following drill: Start the day with a hike to “get everybody’s brain cells going.” Serve breakfast and then host a work session. In the late afternoon, the group stops working and goes swimming, biking, or drinks wine on the deck overlooking Mount St. Helena. “The reason retreats work here is because it’s extremely secluded, beautiful and quiet,” Mr. Kozel says.


Jody and Amy McInnes and other family members bought Cherry Creek Estate, a private residence in Cranbrook, British Columbia, for $2.644 million at an auction in the fall of 2013. Before their investment property could become a destination for corporate retreats and other events, they knew the 13,000-square-foot mansion needed more bathrooms. As part of a $530,000 renovation, multiple washrooms were installed in the basement, and guest suites were added to the Bavarian-style buggy barn. The 320-acre estate includes a gym, billiards room and manicured lawns for bocce ball or horseshoes. “Guests can close our big black metal gates and the place is entirely theirs,” says Mr. McInnes.


Real-estate agents estimate that annual maintenance costs of these estates can run anywhere from $100,000 to $1 million, depending on the age, size and location of the property. At Cherry Creek, corporate events start at $60 per person per day and $130 per person per day if it’s an overnight. Ms. Liteman, the corporate-event planner, says her rule of thumb is about $300 to $500 per person per day, excluding the cost of entertainment or extra team-building activities.


Depending on how the property’s ownership is structured, an executive may be able to write off a portion of the mortgage-interest payments on federal taxes. And some of the maintenance costs and event-hosting expenses may be covered by the corporation. Executives interviewed for this article declined to discuss specifics.


For some companies, the private retreats offer unexpected rewards. Kawikee Plantation, a quail-hunting property with two lakes and stables, has been the private retreat of law firm Butler Wooten Cheeley & Peak, with offices in Atlanta and Columbus, Ga., for more than two decades as a place to take referring lawyers and general counsels of companies, as well as employees, family and friends. The 4,100-acre plantation, located in southwest Georgia, has a four-bedroom lodge overlooking a lake, timber farming, bird dogs and horses. “I could be in the office and 45 minutes later, take some bankers down to Kawikee, and 15 minutes after that be on horseback or fishing,” Mr. Wooten says.


Now, however, partners at the firm are open to selling the property—Mr. Wooten says it isn’t being used as much as it should—with a listing price of almost $9 million. If it sells, they’ll lose what has been an effective recruiting tool. About nine years ago, Mr. Wooten says Butler Wooten was able to convince a bright lawyer at a competitor’s firm to join them. “One of the things that persuaded him was the ability to go hunting at Kawikee,” Mr. Wooten says. “Just last weekend his 6-year-old son caught his first bass there.”

Wall Street Journal, Sep. 11, 2014

Foodie Cities: Real Estate for the Restaurant Set


Real estate offers a place in the gastronomic sun, with elaborate cooking and dining spaces, and locations near restaurants and green markets. One California home has a separate sausage-making kitchen.


Just past the front gate to Bruce Aidells and Nancy Oakes's house is a vegetable garden that yields up to 100 pounds of produce a week during peak season. The couple's 1,000-square-foot commercial-grade kitchen includes an indoor cooking hearth. Other delicacies are prepared in a separate sausage-making kitchen. And the California climate means the outdoor pizza oven is on duty year round.


The couple's 4,200-square-foot Arts and Crafts-style home, built in 2007, is in Healdsburg, Calif., near Napa and Sonoma wineries and renowned restaurants such as the French Laundry.


"Food is what we do, and we built a house to accommodate that," said Mr. Aidells, who has tested recipes for some of his 12 cookbooks and filmed 40 episodes of a television cooking show in the house. Ms. Oakes is chef and co-owner of Boulevard, a celebrated San Francisco restaurant.


The couple's homage to food is one example of how the foodie movement has reshaped residential real estate. Americans' passion for both cooking and cuisine has spurred demand for kitchens with top-notch appliances, specialty prep areas and climate-controlled wine cellars. Many of the newest downtown residential developments are centered on the local food scene, near vibrant green markets and top-rated restaurants run by celebrity chefs.


"Today, when you put together a mixed-use project, you start by talking about the food and restaurants first," said Kenneth Himmel, chief executive of Related Urban, the multiuse division of New York-based developer Related Cos.


The company built Manhattan's Time Warner Center, a residential and commercial development that is home to high-end restaurants Per Se and Masa. For Related's next project, Hudson Yards on Manhattan's West Side, Mr. Himmel said he is negotiating deals with various celebrity chefs to create seven new restaurants for the complex. Another 35,000 square feet will be earmarked for quick-serve eateries with premium ingredients. And, as in Related's other developments, Hudson Yards residents will get VIP treatment, such as delivery service from top restaurants as well as the use of the restaurants for private parties, he said.


In Anaheim, Calif., the Packing House, a food market with 28 vendors that opened in May, has given rise to a new neighborhood, dubbed the Packing District, where Brookfield Residential, a large Canada-based developer, is currently completing 100 condominiums. Units range from one-bedroom apartments for $335,000 to three-bedrooms for $485,000.

Some developers are launching rental buildings with high-end culinary amenities, aimed at younger residents who grew up with the foodie movement. In Madison, Wis., Otto Gebhardt said he took a risk developing the Constellation, a 218-unit apartment building in a "non-glamorous" stretch just east of the state capitol and the University of Wisconsin. But he gambled on the area because the building is just a short walk from the city's restaurant hub and the Dane County Farmers' Market, one of the largest in the country. To burnish the building's foodie credentials, he turned down high-paying commercial tenants in lieu of a local gourmet coffee shop and a craft cocktail bar, he said. In late August, Madison's best-known chef, Tory Miller, opened a 2,700-square-foot Asian restaurant, Sujeo, in the building.


"We have a vision for a place where people can live and go get a cocktail, get dinner, go to the farmers market," said Mr. Gebhardt, president of Gebhardt Development. The building, which charges up to $2,500 a month for a three-bedroom, was fully leased the day it opened, Mr. Gebhardt said.

Jeremy Johanski, 31, rents a two-bedroom penthouse in the Constellation for about $2,000 a month. Mr. Johanski, who works in human resources and runs his own event-planning company, said he "enjoys being a foodie in the place where I live" and posts pictures of his food and drink experiences about twice a week on Instagram. Since moving to the building, he goes out to eat in nearby restaurants about five times a week and shops every Saturday at the farmers market.


"I've traveled a lot for my event business, and I decided I wanted to have amenities like I've seen in other cities at my doorstep," Mr. Johanski said.


Gotham West in Manhattan, which began leasing last year, offers a ground-floor market with Blue Bottle Coffee, ramen dishes and an upscale deli. Monthly rents range from about $3,250 for studios to $15,000 for three bedrooms; units have kitchens outfitted with KitchenAid and Bosch appliances, and cooking classes are offered in the building's communal kitchen. In Chicago, K2 Apartments, a development that opened last year, touts its proximity to Randolph Street, with numerous restaurants, and the French Market, where 30 local food vendors sell items like lobster rolls, crepes and artisanal cheese. Monthly rents there range from $1,720 for a studio to $6,500 for a three-bedroom penthouse.

Some homeowners are building their own temples to food. Jerry Kleiner, a Chicago restaurateur who co-owns Carnivale and Gioco, among others, bought an industrial garage and turned it into an 8,500-square-foot villa with a giant kitchen, a dining room with 30-foot ceilings and brilliantly colored velvet dining chairs that he designed himself. For years, Mr. Kleiner auditioned potential new chefs for his restaurants in his home kitchen. He also hosted charitable events for hundreds of guests featuring foods from 30 different restaurants.


"It was the perfect dinner-party house," said Mr. Kleiner, 58. He bought the property in 1998 for $400,000 and put over $2 million into renovations over the years, he said. Now living primarily in Los Angeles, Mr. Kleiner has listed the house off and on for the past couple of years, most recently at $2.795 million. Listing agent Joseph Gasbarra of Coldwell Banker Previews said he promoted the home's culinary features in marketing materials and showed it to Chicago restaurateurs before Mr. Kleiner took the property off the market in August.


Real-estate agents say the foodie angle can be a key selling point for a luxury property. In January, Seattle broker Moira Holley listed a two-bedroom unit in the Market Place North Condominiums, a building right next to Pike Place Market, considered by some to be the epicenter of the Northwest food scene. Photos in the listing materials showed views of the market from the deck.


The day the property was listed, Tom Douglas, a chef who co-owns 15 restaurants in Seattle, made a full cash offer of $1.175 million, he said. Mr. Douglas and his wife, Jacalyn Cross, also own a farm in eastern Washington and a home in Ballard, a neighborhood in northwest Seattle. But they wanted to be right near the Pike Place Market, where Mr. Douglas spends his mornings sipping coffee and meandering past stalls, enjoying the sounds of street performers and carts clattering over cobblestones. He stops to buy croissants, meat and spices, spending much of his time greeting friends from the food world and tourists who recognize him from his appearances on television food shows.


"We wanted to be able to live the foodie life we've already been living for the last 30 years," said Mr. Douglas.


Mr. Aidells and Ms. Oakes declined to say how much they paid to build their Healdsburg home; local real-estate broker Eric Drew of Healdsburg Sotheby's International said comparable homes in the area would list for between $5 million and $7 million. Ms. Oakes called their house "a sanctuary." The couple has just one quibble.


"We can't work together in the same kitchen. It gets ugly," joked Mr. Aidells, adding that different cooking styles can lead to conflict. Ms. Oakes said one of the benefits of the house's many cooking areas—the outdoor pizza oven, indoor hearth, various grills and a tandoori oven—is that she can usually send Mr. Aidells off somewhere to cook the meat.

SONOMA RANCH