The Arkansas Club at the Queen Anne Mansion in Eureka Springs is looking for owners - 82 to be precise.
The mansion is known as a “fractional ownership property,” in this case a version known as a private residence club. Fractional ownership allows multiple owners to share the cost of purchase and expense of luxury items, from vacation homes to yachts, sports cars and private aircraft.
The idea differs from time-shares in that investors own part of the title of the item purchased, not just units of time associated with it. In a fractional ownership, if the asset’s value increases so does the investors’ share in the property or item.
The mansion was fully renovated in 2010 and was opened as a museum. Owner Steve Lovell said recently that it became clear that plans to run the place as a tour location would not be sustainable. Even though the property at 115 W. Van Buren St. is beautiful and stately, eventually it would become too costly to operate at a profit and would fall into disrepair, he said.
“I realized we had to do something,” he said.
In 2012, Lovell and his wife, Lata, who live in Florida, hit on the idea of selling 82 individual shares of the four-story, 12,000-square foot mansion. Since then,the Lovells have purchased 3 adjoining acres, increasing the property to 5 acres total and have added private access with a new gate, a pool, putting green and bocce ball court. Construction was completed at the end of 2013.
Lovell said that including the original purchase price,renovations, the property’s collection of antiques and art, the recent land purchase and various new amenities, the couple have invested between $10 million and $11 million in the project.
“We are looking for a group that wants to giveback and leave a legacy in a way that’s affordable,” Lovell said.
To begin the endeavor, the club needs to sell 24 shares at $150,000 each. At that point, the Lovells will underwrite the project until the remaining shares are sold.
Richard Ragatz, president of Oregon-based Ragatz Associates, a consulting firm that focuses on resort real estate, said fractional ownership has been around for quite a while, usually restricted to families who wanted to share vacation properties. He said the actual industry began in earnest 20 years ago, though he’s followed it for twice that amount of time.
He said as opposed to time-share properties, fractional ownership operations tended to be higher-quality, offer more services and give participants more time at the location, but are also more expensive. Ragatz said the typical time-share owner has an annual income range of $85,000 to $90,000, while fractional owners tend to earn more than $225,000 a year.
The fractional ownership market in North America was hot in 2007, with $2.3 billion in annual sales, right before the recession, according to a report from Ragatz Associates. The economic downturn hit the segment hard, with sales declining most years through 2012, where sales volume was reported at just under $500 million.
In an interview, Ragatz said that after years of stagnation, with uncertainty about the economy and lack of financing options putting pressure on consumers, the industry is poised to rebound. He said he’s confident consumers are still interested in the concept, but hard financial times have slowed sales.
David Harries, director of marketing for the Arkansas Club at the Queen Anne Mansion, said they are halfway to their goal and expect to have the first 24 shares spoken for by April and hope to be able to close the deal by June. The first 24 shareholders will have certain perks, including a say in who joins the club in the future, and the $150,000 “ground floor” share cost. Harries said it’s expected that cost of shares in the club will increase as time goes on.
As a shareholder, a person will have access to 28 overnight stays per year in one of the property’s seven suites and unlimited day access to the property and its amenities. Other benefits include access to the estate’s spa, which features steam showers, a Finnish sauna, massage areas and manicure-pedicure chairs. There are more than 3,000 square feet of common areas as well as a commercial-sized kitchen for events and a smaller kitchen for use by the owners.
Expenses for upkeep of the grounds and a full-time staff will be paid from a monthly fee expected to be about $700.
Members also will be able to exchange their time, in seven-day increments, at destinations around the globe though the Registry Collection and the Presnell Collection of hunting and fishing expeditions.
The world’s largest luxury exchange program, the Registry Collection has more than 200 properties including condos, high-end fractional resorts, private residence clubs and fractional yachts. The program operates under the Wyndham Worldwide umbrella.
The Queen Anne Mansion was built in 1891 in Carthage, Mo., for Curtis Wright. It had several owners and was eventually purchased by Ron and Mary Lou Evans of Kansas City, Mo., who moved the building to Eureka Springs in 1984. It was renovated and operated as a bed and breakfast until it was sold to the Lovells in 2005. It opened in 2010 as a museum where folks paid $10 a tour. Today it’s filled with museum-quality pieces and a few modern reproductions.
“It’s decorated just like a wealthy family at the turn of the century would have had it,” said Beth Kikoen, operations manager.
The place also is home to about 90 pieces of Eureka Springs artist Susan Morrison’s American Wildlife collection. Morrison oversaw the placement and framing of the pieces, which include some of her poems.
The property’s seven suites had elaborate bedrooms and bathrooms, some with modern walk-in showers and claw-foot bathtubs. The entire premises has wireless Internet access, and the bedrooms have small, flat-screen televisions.
Kikoen spends many nights on the property, trying out the various suites, making sure the place feels more like a home than a museum. She said being in the Queen Anne Mansion when it’s filled with people makes her happy.
“I thought it would be stuffy, but its not about that. It’s all about living here,” she said.
Business, Pages 73 on 03/02/2014