Capital One SOLUTIONS – INDUSTRY EXPERTISE
Interview James M. Casey is a senior vice president and managing director of Commercial and Specialty Finance at Capital One. In this role, Mr. Casey leads the bank’s vacation ownership lending platforms, which provide notes receivable and other financing products to resort developers.
You’ve been active as a lender in the vacation ownership industry for a long time. Can you tell us a little about yourself and Capital One’s goals and objectives?
I started on the ground floor in receivables-based financing more than 30 years ago. Since then, I’ve worked my way up specializing in the vacation-ownership industry. The industry has come a long way since then, with many twists and turns, and I’m excited to see how it continues to evolve.
As a lender, my goal is to build true partnerships with our clients. We want to provide exceptional flexibility and a number of banking solutions to help clients meet their financial needs.
What is the scope of your business right now? For example, are you involved only with major developers? Involved in securitizations?
We work with all types of developers, both big and small, primarily focused on notes receivable financing, as well as inventory and construction loans. As a part of Capital One, we can easily scale a number of financial solutions to grow with our clients as they reach their financial goals.
We are involved in securitizations and have been working with our Asset-Backed Finance Group here in Capital One to continue evolving in that area. This is just one great example of how we are putting the full capabilities of Capital One to work for our clients.
Does Capital One ever get involved with other lenders in a transaction?
It depends on the transaction, but we regularly work with other lenders both by bringing them in on our transactions and by participating in syndications.
What type of new business are you looking for? i.e., developers only? HOAs? US only? Would you consider international? And what would you see as minimums and maximums?
Our primary business is focused on U.S.-based developers. We are exploring HOAs and some international business where it makes sense for us including in the Caribbean. We work within a wide variety of parameters and therefore do not consider definitive minimums or maximums when reviewing potential deals. For us, it is more about finding the right partnership. Furthermore, we are always looking for the best place for investment opportunities whether it is investments uk, Canada, the USA, or anywhere else, in order to grow and expand our business working through a partnership.
What advantages do your clients have since you are backed by a large lending institution?
As a large financial institution, Capital One offers great stability and flexibility for clients. We have a deep bench of expertise in this industry, and we are here for the long haul. In addition, our cost of capital is low, and we bring a wide variety of products and services to meet our client’s needs – everything from receivables loans to treasury management services and corporate credit cards.
What considerations should potential borrowers make when choosing a financial partner?
It’s important to choose a lender with experience in this industry who can provide trusted guidance and financial solutions. Look at the breadth of services offered as well as their ability to provide new services as your company evolves. Ultimately, lenders should be partners with a vested interest in their clients’ success.
What do you see as the primary opportunities and challenges for the industry in 2016?
We are seeing increased access to financing and strong liquidity in many sectors including the vacation ownership market. Across the industry, we have seen new sources of funding such as non-bank entities and private equity become available to borrowers. I think this is a great indicator of the growth and stability within the industry. According to our most recent vacation ownership survey conducted at the ARDA World conference, 94 percent of industry professionals expect general interest in timeshares to be stronger or on par with the past year.
In addition, the survey pointed toward the continued popularity of points-based structures and travel club memberships amongst consumers. Other trends gaining momentum include developers moving to new and emerging markets (20 percent) and adapting developments to attract younger, millennial vacationers (20 percent).
Oversupply of resale inventory (31 percent) and overheating sales and marketing costs (30 percent) were identified as the top challenges for the timeshare industry this year. In addition, 68 percent of respondents identified sales as the most competitive area in the timeshare industry, a dramatic jump from 30 percent in 2014.
