With 300 investors across Western Canada — including such high-profile backers as Edmonton Oilers’ veteran Ryan Smyth and Clark Builders CEO Paul Verhesen — Stephen Petasky’s Luxus Group now owns about 40 properties worth roughly $60 million. That makes it one of the largest luxury real estate partnerships in the world.
Photograph by: Pure Vision Inc., supplied
EDMONTON - In 2007, Stephen Petasky launched a small real estate investment partnership called Luxus Group.
Backed by about 20 high net worth investors — including his parents Don and Nancy Petasky, who owned two Sobeys stores in Sherwood Park — Petasky’s firm began acquiring luxury vacation properties in places like Canmore, Maui and Scottsdale.
Unlike many other real estate buyers during the pre-recession bubble era, Luxus wasn’t chasing quick-flip deals in the hope of generating instant profits.
Instead, he and his investor-partners — most of them from the Edmonton area — were more conservative and lifestyle-driven. They wanted to preserve capital while assembling a portfolio of high-end properties for their own use, and which would ideally grow in value over time.
The properties would be fully furnished and actively managed, but they wouldn’t be rented out. And unlike timeshare units, which are usually booked solid, Luxus would let its units sit empty for months of each year.
That way, its investor-clients would have more flexibility to book vacations when and where they chose, without constantly competing for availability.
The company’s first limited partnership — known as the Luxus Premiere Collection — set out to acquire a total of 30 properties. At that point, Luxus would cap further investment.
Six years after it was born, Petasky’s humble venture has far exceeded expectations.
With 300 investors across Western Canada — including such high-profile backers as Edmonton Oilers’ veteran Ryan Smyth and Clark Builders CEO Paul Verhesen — Luxus now owns about 40 properties worth roughly $60 million. That makes it one of the largest luxury real estate partnerships in the world.
To celebrate, Luxus is hosting a company bash Saturday at a hangar at Edmonton International Airport. About 350 guests are expected to attend, some from as far away as Italy.
“We’re at a point now where we think we have something to share. We’ve grown to about 300 partners, and the big milestone we recently achieved was the sellout of our first (partnership),” says Petasky.
“We’ve just added our 31st property in the Caribbean, we’ve launched our second investment group, and we have also launched what we call our Lifetime Experiences program. So this is a really exciting time and we wanted to share our enthusiasm with all of our partners.”
Luxus’s inaugural partnership — which owns the so-called Premiere Portfolio — attracted roughly 200 investors. Its 31 properties were recently valued at an average of $1.2 million apiece.
Since Premiere sold out, Petasky launched a second limited partnership. The so-called Luxus Elite Portfolio has grown to eight properties, worth an average of $2.7 million apiece. It will ultimately grow to 15 properties stretching from North America to Costa Rica, and from the Caribbean and Italy.
Luxus has also formed alliances with two other major players in the industry — one in London and the other in Atlanta — so it can now offer its clients access to 75 other high-end luxury properties around the world.
Investors in the Premier Portfolio coughed up anywhere from $140,000 to $240,000 apiece, while Elite Portfolio backers invested from $155,000 at the low end to a high of $550,000 each.
To cover basic operating costs, investors also agree to pay annual fees. For Premiere, those fees run from $6,000 to $10,000 per year. For Elite, the fees can run as high as $23,000 per year.
In other words, the investments are not geared to typical retail investors. Luxus targets its offerings to high net worth individuals — those with a minimum net worth of $1 million and annual income of at least $200,000.
Eventually, the goal is to wind up the portfolios by liquidating their holdings, allowing investors to cash out. For Premiere, the proposed termination date is in 2018, and for Elite, it’s not until 2023. But the dates can be extended, if at least 75 per cent of participating investors so choose.
So far, so good. Premiere’s properties are up about 7.5 per cent in value this year, after four relatively flat years, says Petasky. Elite is up about eight per cent, year-over-year.
“Right now we don’t know anyone yet who has an interest in leaving in 2018. To date we’ve only had three people leave Luxus out of 300, and in each case it was due to a significant life event like a death in the family,” says Petasky.
“During the recession we only had 65 clients but we never lost one, and not a single client from day one has missed a payment. We have said no to people where we think it’s not a good fit, and so far, we’re right on track.”
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