Sunterra buys rest
of Kauai time-share

The firm pays $27 million
for the remaining interest
in the partnership that
operates a Poipu resort

Marking its second major acquisition in Hawaii in just over a year, Sunterra Corp., a major resort time-share company based in Las Vegas, has agreed to acquire the remaining interest in a partnership that owns and operates the Embassy Vacation Resort Poipu Point on Kauai for approximately $27 million.

The acquisition comes a year after Sunterra acquired the remaining interest in the partnership that owns and operates the Embassy Vacation Resort Kaanapali for $94 million.

Sunterra owns and operates time-shares based on a model allowing buyers to acquire "points" that can be used at properties throughout the company's system of 96 resorts located in 13 countries. Sunterra said this model gives buyers more flexibility than a traditional time-share model, in which buyers acquire a block of time, such as one week, they can use at a particular unit of a specific property.

Sunterra finances many of the point acquisitions for retail customers.

The Kauai acquisition gives Sunterra the equivalent of 1,400 additional unsold weeks, which carry an estimated retail value of $30 million, the company said. Furthermore, the company said, the acquisition gives it approximately $22 million in performing mortgage receivables.

Sunterra previously had owned 30 percent of the partnership that owns the resort, Poipu Resort Partners LP. According to the deal announced yesterday, it acquired the remaining 70 percent from its partners in Poipu Resort Partners. Sunterra declined to identify the selling partners.

Closing of the deal is expected to happen within the next 30 days.

Embassy Vacation Resort Poipu Point is located on 22 acres overlooking Keoneloa Bay in Koloa on Kauai. The resort has 219 two- and three-bedroom units, a lagoon-style swimming pool, beach, whirlpools and a sauna and steam room. It is next door to the Poipu Bay Resort Golf Course.

Bryan Coy, investor relations director for Sunterra, said points giving buyers a week of time in a two-bedroom unit at a Sunterra resort would retail for approximately $15,000 on average. In Hawaii, he said, the retail price might be nearly twice that much.

In 2004, Sunterra reported $364 million in revenue and $60 million in adjusted cash flow. As of March, before the acquisition in Kauai, the company said its unsold vacation points carried a retail value of $800 million, with 26 percent of that in Hawaii.