Welk Resort Group plans to issue $129.6 million of securities backed by timeshare loan receivables, following a two-year securitization hiatus for the issuer.
Welk Resort 2015-A, led by BB&T Capital Markets, will offer $118 million of class A notes, rated A’, that benefit from 12.75% credit enhancement and $12 million of class B notes, rated BBB+’, that benefit from 4% credit enhancement. Standard & Poor’s is rating the deal.
The loans being securitized include both vintage deeded vacation ownership interest loans as well as points-based vacation ownership interest loans in the Welk Resorts Platinum Ownership Program.
Loans in the pool have a weighted average term of 10 years and are, on average, 6.5 months seasoned. Borrowers in the pool have a weighted average FICO of 724.
A vacation ownership interest loan is typically an installment sale or mortgage loan with an original term generally in the seven- to 10-year range that is secured by a right to use the property or by a deeded interest. Timeshares were typically sold on a fixed-week, fixed-unit basis that gave the timeshare owner the right to use the property for a defined time period each year in perpetuity.
However points programs introduced in 1990 allowed purchasers to “buy points” and apply these towards the use of the timeshare property within a developer's system, subject to availability, at any time during the year.
Welk Resort Group Inc. was formed in 1964 by Lawrence Welk, host of the Lawrence Welk Show from 1955 to 1982.The group established its first timeshare development in 1984.
Welk operates resorts in San Diego, Calif.; Palm Desert, Calif.; Branson, Mo.; Cabo San Lucas, Mexico; and Lake Tahoe, Calif. As of December 2014, the issuer had approximately 50,000 member families in the portfolio and reported timeshare sales of more than $147 million, with approximately 641 million annualized points available for sale, according to the presale report.