News From the Big Leagues

Capital One announced closing a four-year $100 million senior warehouse facility for Diamond Resorts International on June 29, 2016. Headquartered in McLean, Virginia, Capital One Financial Corporation is a financial holding company whose subsidiaries include Capital One, N.A., and Capital One Bank (USA), N.A.

Concurrently at the end of June, Diamond Resorts International Inc. announced it was to be acquired by affiliates of Apollo Global Management LLC for about $2.2 billion. Now, according to a statement released on August 15, Apollo’s acquisition is due to close later this fall. Details are still being worked out, as this issue of Resort Trades goes to press.
As one of the largest timeshare companies in the world, with 426 managed and affiliated vacation destinations in 35 countries, the fortunes of Diamond Resorts affect all of us in the industry, indirectly. It is a regular issuer of timeshare-backed securities and is one of only two issuers to have received an AA rating from the rating agencies. Therefore, it’s logical to presume that the deal will go through, after the parlaying back and forth that is so typical in these deals has been completed.

We were intrigued to know more about Capital One’s role in handling the warehouse transaction and managed to get in touch with Capital One’s Vacation Ownership Lending group.

Following is our conversation with Jim Casey, Vice President and Managing Director of Capital One’s Vacation Ownership Lending group:

RT: What types of financing does Capital One offer clients in the Vacation Ownership industry?

CASEY: We bring a wide variety of financial solutions to meet our client’s requirements–everything from receivables, inventory and construction loans to treasury management services and corporate credit cards. We’re continually looking for ways to put the full capabilities of Capital One to work for our clients.

RT: What kind of financing did Capital One provide on this deal specifically?

CASEY: Capital One provided a four-year $100 million warehouse facility for Diamond Resorts International, which will use the facility to finance notes receivable generated from the sale of vacation ownership intervals from its resort properties.

RT: Can you describe what the process was like to put the deal together?

CASEY: Our relationship with the Diamond Resorts team has evolved over many years, and we were happy to be able to work with them on this transaction. Their leadership team has been in place for a long time and has a great track record. Once the terms were set, the deal came together rather quickly thanks to our established relationship and the team’s professionalism.

RT: Why do you think Diamond Resorts chose Capital One for this transaction?

CASEY: Capital One is a top 10 bank and has a proven track record in the vacation ownership market. Our team has a true understanding of the complexities that our clients face. We are in this segment for the long run and have and continue to build relationships with many of the industry’s leaders. That level of commitment and expertise, along with our data-driven approach, is what we offer all of our clients.

RT: Can you think of any additional observations you might want to make as to the industry as a whole, the attitude and readiness of consumers to make timeshare purchases, etc.?

CASEY: According to our annual vacation ownership survey, more than 95 percent of industry professionals expect consumer interest in the timeshare market to be stronger or on par with the past year. Over the past few years we’ve seen the industry’s optimism and resilience outweigh worries about liquidity or the broader economic markets. We’re working closely with our clients across market cycles to provide a range of financing solutions customized to meet their needs.