Jim Tousignant, founder and CEO of Ultimate Resort, called today to update us on his deal to buy the assets of Tanner and Haley. He confirmed that his acquisition closed last Friday, and that Ultimate Resort now owns over $100 million worth of homes that had been in the Tanner and Haley portfolio.

Tousignant also confirmed:

• Over 650 Tanner and Haley members joined Ultimate Resort, choosing one of their two membership plans.
• Ultimate Resort secured additional debt financing from CapitalSource (an experienced lender in the destination club industry), as well as “substantial” equity financing from new and existing institutional investors. He did not disclose these amount.
• The club inherited many home leases from Tanner and Haley that will be maintained to support member travel plans. With these leases Ultimate owns 60% of the homes in the portfolio and leases about 40%. Tousignant says the plan over the next year is to reduce the leases so that the ratio grows to 80% owned and 20% leased. This is what we would expect to see in a stable club.
• Existing members asked for the opportunity to invest in the club, and that another round of equity financing will come from members and management. In general, we would view this as a positive sign, as members are willing to risk their own capital.

While the transaction close seems to be more of a formality, it is an important step for Ultimate Resort, and to some extent, the destination club industry. What was an industry black-eye has been salvaged to create the second largest destination club in the industry. What’s next? Tousignant and his team now have enough locations and homes to prove to prospects that they will be able to travel when they join. But, as before, they will need to demonstrate financial stability, and operational excellence.