Capital Markets

Timeshares Secure Wyndham Debt Facility

The hospitality chain closes $943 million in financing secured by a vacation ownership unit with properties in North America, the Caribbean, and th...
Stephen TaubNovember 11, 2008

Wyndham Worldwide said it closed on a new $943 million conduit facility that is being secured by timeshare receivables.

Eight banks participated in the financing, led by JPMorgan Chase Bank, N.A., and interest on the 364-day facility is based on variable commercial paper rates plus a spread.

“The conduit adds valuable liquidity to our financing capability,” said Wyndham Worldwide Chairman and CEO Stephen P. Holmes. “We are pleased with the execution of this transaction in a challenging credit environment.”

The hospitality company claims its Wyndham Vacation Ownership unit is the world’s largest timeshare business, as measured by the number of resorts, units and ownership interests. As of Dec. 31 Wyndham Vacation Ownership had developed or acquired about 145 vacation ownership resorts throughout the U.S., Canada, Mexico, the Caribbean, and the South Pacific that represent more than 17,500 individual units and more than 800,000 owners of timeshare interests.

The business is somewhat controversial because it is pitched as an alternative to owning real estate. However, even before the global real estate collapse, timeshares have been classified in the same manner as automobiles — with new units depreciating in value as soon as a deal collapses.

In addition, financing is usually provided by the timeshare developer, at rates that are relatively quite high even during stable economic times. That presents a question of whether cash-strapped recent buyers might choose to walk away from their timeshares altogether.

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