Alerted today by Reuters, Cerberus – a hedge fund and private equity firm – is buying timeshare operator Silverleaf Resorts. They are paying $2.50 a share, or a 75% premium with cash. Silverleaf (SLVF.O) was trading at $1.43 yesterday.
So why would Cerberus want Silverleaf timeshare resorts? According to the report, “Private equity firms are looking to buy assets as the office and hospitality real estate sectors recover, and as concerns about inflation increase the interest in real estate as an investment.”
Ouch. There goes that bad word again, “investment”. Maybe a private equity firm would consider a low priced company like Silverleaf timeshares an investment. However, if you are thinking of buying a Silverleaf timeshare, or selling your Silverleaf timeshare, whatever you do, do not consider it an investment. Retail prices for Silverleaf timeshare resorts are unusually high especially from what I have seen in Texas.
As I have said in the past, a timeshare is only an investment from the perspective of using the timeshare long term as a discount on your regularly planned vacations. From that viewpoint, it is an investment in your family vacations.
If you think you will make a profit when you sell your own timeshare, you better think again! Especially if you paid the going price at the timeshare resort. Silverleaf timeshares can be bought for pennies on the dollar on the timeshare resale market. Especially from owners who are tired of the escalating timeshare maintenance fees.
So Cerberus is buying Silverleaf timeshare resorts? Ok. Good for them. What about you the owner of a Silverleaf timeshare? Time will only tell if Silverleaf’s practices and management will change.
Wait and see.