Sunterra Pays $43M for $93M Loan Portfolio

LAS VEGAS-The publicly traded vacation ownership company Sunterra Corp. has acquired a $93-million loan portfolio from Prudential Securities Credit Corp. for $44 million in cash. This transaction is the second part of Sunterra’s acquisition of Epic Resorts.

The portfolio includes more than 11,000 Vacation Interest receivables. About 5,800 of the loans are performing with a weighted- average interest rate of 15.7%. The loans have an average seasoning of 39 months and are secured by approximately 44 million Vacation Interest points in Club Sunterra Vacations II, formerly known as the Epic Vacation Club. The remaining 5,300 receivables are largely defaulted non-performing mortgages with an outstanding principal balance of $49 million that are secured by approximately 39 million Vacation Interest points in the same club.

Sunterra, one of the world’s largest vacation ownership companies, has over 340,000 vacation owner families and over 90 resort locations in the US, Europe, the Caribbean and Mexico. In October 2003, Sunterra acquired substantially all of the assets of Epic Resorts. The purchase included unsold Vacation Interest points at five vacation ownership resorts in Hilton Head, SC; Daytona Beach, FL; Scottsdale, AZ; Las Vegas; and Palm Springs, CA, as well as development land at the Hilton Head location and management contracts on all of the resorts except the Palm Springs location. Last month, Sunterra announced that it had entered into an agreement to sell the Hilton Head development land, unsold Vacation Interests at that resort and the related management contract.