By: Marina Salley, head of Investor Relations at Equity Residences
At Equity Residences, we get lots of questions about how our homes are launched. The truth is, no two homes are the same. I sat down with our Head of Portfolio Management, Brandon Cassignol, to talk about the Big Sky launch.
The Big Sky Resort residence for the Equity Platinum Fund 2 became one of our most popular investor homes in a short period of time.
Brandon Cassagnol, Vice President of Portfolio Management at Equity Residences
Below is my conversation with Brandon, edited for clarity and length.
Marina: The Big Sky has been one of our best acquisitions so far, and you went to Big Sky to launch that home. What was it like? What is required for a new launch?
Brandon: Yeah, great question. And when you think about our business model, obviously, for it to work efficiently and for us to get the most value from any investment we make in our homes, things need to happen rather quickly.
That typically kind of goes directly against the other aspect of our business, which is that we’re promising a luxury product. And luxury sometimes means slow, methodical, and very well thought through. How do you combine efficiency with ultimately getting the best product out there for our investors and our guests to enjoy?
- Well, you have to have some really great partners.
- You have to have a wonderful set of vendors and suppliers to get a home up and running.
- You have to have a very intimate knowledge of both the local market and everything that goes into setting up a luxury short -term rental.
It was cool to see the team come together for a project like this.
Shortly after closing in October, we had our furniture on arrival, we had a professional photographer flown in from Colorado, we had our design plan set up, we had our linens and terry package ordered, we had our new property manager squared away, and we had three Equity Residences team members visit in a matter of 90 days to make sure the home was up to snuff, that the home was functional, that the the home is living up to our standards. And really, this whole process came together in a matter of about 90 days from closing.
So all of that is to ensure our investors get the most value, both on the financial side of our business, but also from being able to enjoy the home and it’s up to its full potential.
Marina: That sounds great. I saw the “before” pictures of Big Sky and then the home after your visit. There is a huge difference. Tell us a little bit, how did you upgrade the house to look way, way better? And what was the upgrade for this type of project?
Brandon: Yep, absolutely. And so, in a home like this, which is a very classic mountain home, it also had some classic furnishings. We’re setting the home up to really set ourselves apart from all the other homes in this area in Big Sky.
So how do we set ourselves apart? We make strategic upgrades to the finishes and fixtures in the house. And so this is why we partner with amazing suppliers like Dahlgren Duck, who has connections to every major furniture supplier and mom and pop shop to one, get us the best deal at well below retail pricing, but also to deliver it timely and with furnishings that are hospitality grade.
So our approach on this home was focused on the main living area, the dining room, the primary bedroom, and ensuring we created really comfortable, convenient sleeping locations.
The home originally had one king bed, two full mattresses, another queen, no sleeper sofa, and probably slept eight people comfortably. With the changes we made, we now have three king beds that support many different party accommodation types.
We redid the bunk room and moved it upstairs to create a second primary suite on the ground level that was previously used as the bunk room. And then in the living room, we added a beautiful new sofa. One guest has already commented that it was the most comfortable sofa they’ve ever sat on, which was great immediate feedback. But we also took time to update other seating.
We took away a very dated square dining room table for a round table that’s just much more conducive to things you do on vacation, like card game and hosting a party of 10. It’s just much more fun with your friends. A lot of our investors bring their friends and family.
Safe to say, we try to take everything into consideration and try to accommodate as many different party dynamics as we can that are going to be enjoying the home.
So I’m very excited about how it turned out.
We also made refreshes to our art and decor, which is the finishing touch that makes the difference between any home and, obviously, a curated luxury experience.
Marina: That all sounds wonderful. One of the questions investors always ask is how we choose our homes for their projected ROI. What do you know about Big Sky? What is the projected cap rate on that and the projected occupancy on that?
Brandon: Big Sky is a very interesting market. And the fact that Big Sky was originally labeled a failed development and was a failure. If you were early in Big Sky, you really are feeling good about your investment now. But the beauty of Big Sky versus Vail or Aspen or even Tahoe is it is not an established market. In Vail Village, you can’t build new construction anytime soon. And you have a lot of legacy homeowners who have been sitting on their houses for 10, 20, 30 years. These are homes that get passed down from generation to generation. And so what that creates when you think about a rental market is people who are really comfortable charging lower rates, because their mortgage payment either doesn’t exist, or their expectation of a return is very different because of what they originally paid for their home, versus someone trying to come in with a new investment.
The difference in that and Vail, where it’s hard to generate a 1 % cap rate on something you purchased today, versus somewhere like Big Sky, is that it’s still very much a developing market. And the beauty of the mountains is that Big Sky will become available someday where there is no more room to build in an area that’s considered a premium location within the resort, there’s only so much space. And buying ski-in/ski-out at a premier mountain destination is near impossible. So, in order to find a gem like this really supports what’s most important to us, and our investors, which is the potential for long term appreciation.
And, you know, Big Sky is now home to the One and Only, a five-star resort. It’s home to the Montage. Brands like that coming in suggest that this investment was already a great, great opportunity. So we’re thrilled with finding something like this.
As far as a cap rate goes, the mountains can be one of the most challenging types of vacation destinations to make something pencil for the way we operate our homes. That’s because you have very volatile ski seasons that are dependent on snow. We know this year has been difficult. And then you have very clear shoulder seasons, meaning there’s very typical lower occupancy due to closures and just inclement weather with no skiing available. Or it’s not quite warm enough to go hiking, so you have to be able to support it in your model.
The beauty of what we’ve seen in Big Sky is a willingness to go to Big Sky and have a great time. And so when we talk about occupancy, we’re already well north of 60 % on the books for this year. It’s also one of the leaders in our partner usage, which is exciting to see. It tells us we probably want more mountain homes in the future. And so the home is already exceeding expectations on that aspect of the use and enjoyment of it. I love it because Big Sky has been on that investor wish list for a long time.
Marina: Absolutely. To fulfill that wish, some of our investors actually moved their reservations from other mountain homes like Ville and Tahoe to Big Sky, because they want to go and visit the new destination. It’s always exciting, right?
Brandon: Absolutely. It’s in a ski -in -ski -out house, so it’s within walking distance to the main attractions in the village. And Big Sky is unique in that there are several little pockets. You either stay at the One and Only in that area, you stay at the Montage, or you stay at Moonlight. And what they’ve really tried to do in Big Sky is create these local communities, which can be challenging to find at some of the more legacy resorts. And so we feel very good about the continued development and improvement. But we’re in more of the original area of Big Sky. There’s more of a local population. There are more restaurant options. Whereas if you stay up at Moonlight Basin, getting anywhere is going to take you 30 to 45 minutes if you don’t want to eat at their restaurant. So we feel great about the location.
And we also feel great about what Big Sky is doing in the form of future investment around us.
We hope you enjoy our Big Sky home when you invest! Contact me at marina@equityresidences.com with your investment inquiries.
