With the announcement that it had purchased Trendwest Resorts last week, Cendant Corp. is now the parent company for two of the more visible timeshare finance companies in the term ABS market. Cendant had already owned RCI, the largest vacation timeshare exchange.
Rather than combining Trendwest with Cendant unit Fairfield Resorts, the parent will likely keep the two entities separate, meaning each will continue to securitize independently of the other, said sources familiar with the situation. This acquisition is seen bolstering Trendwest ABS, due to the financial strength of the new parent, rated Baa1/BBB/BBB+ by Moody's, S&P and Fitch, as well as Cendants leading position in the industry and experience as a securitizer.
Even though each company focuses on similar demographics - mainly empty nesters - the varying business practices of the two companies will likely lead to the units operating as competing entities under the Cendant umbrella. Each firm has varying geographic strengths, with Trendwest in the Pacific Northwest and Fairfield on the east coast. The companies compete head on in Las Vegas.
While Fairfield has a more traditional real estate interest with its contracts, Trendwest offers customers the option to apply shares towards staying in any of its 40 various resort locations.
Last Monday, Cendant Corp. announced that it had agreed to purchase Redmond, Wash.-based Trendwest, which had peen majority owned by building product maker JELD-WEN. Cendant had purchased Fairfield last year. Cendant also recently purchased Equivest Finance, a timeshare lender that most likely will be integrated with Fairfield.
Trendwest is an annual issuer of timeshare-backed ABS, having priced a term deal in each of the last three years. It has yet to securitize so far in 2002. By contrast, Fairfield has only sold one term ABS, last year's 2002-1 deal. Each of the issuers tap the private 144A markets, and offers securities via underwriter Banc One Capital Markets.
