Denver-based private equity real estate fund manager Occasio Funds has launched the first fund to invest exclusively in luxury residential resort properties. The firm’s maiden vehicle, Occasio Growth Fund I, is targeting $100 million in equity, capitalizing on the growing $24 billion luxury vacation rental industry by collaborating with operating partners to lease and manage such properties.
“This is truly a new asset class within the residential real estate spectrum,” Occasio chief executive and founder Ben Rule told PERE. “It involves many of the tenets of basic real estate—acquiring very good properties in great areas at low prices and having them well managed and operated.”
Occasio will acquire homes in top-tier resort markets across the US and Mexico, including Vail and Aspen, Colorado; Maui, Hawaii; Naples, Florida; Los Cabos, Mexico; and wine country in California. Rule noted that the fund will aim for acquisitions in the $1 million to $10 million range, with a $3 million deal average, adding that properties will be “turnkey ready, right down to the dishes.”
Thus far, Occasio has seen interest in the offering from high-net-worth individuals and family offices, as well as a few large institutions, and hopes to close on $25 million by the end of first quarter. According to Rule, the fund’s most attractive quality for investors is the promise to diversify and strengthen portfolios with a range of assets in many markets. “With a $100 million fund, we’ll have 30 to 35 properties spread across eight to 10 different locations, which provides a lot more diversification,” he said.
Over the past six months, Rule has worked to launch Occasio after breaking out on his own from luxury vacation club Inspirato, where he served as vice president of finance and strategy. With nine years in the destination club industry and seven years in investment banking under his belt, he decided to build a business based on the relationships and knowledge he gained in order to satisfy a new real estate niche. Inspirato will serve as the key strategic operating partner for Fund I.
According to Rule, the luxury residential industry always has been a ‘mom-and-pop’ business, driven by individuals who rented out their homes without a professional or institutional group targeting the assets. Occasio believes now is the opportune time to introduce a new asset class to institutional investors due to the “confluence of two macro trends: the bottom of a real estate cycle and an increasing shift toward consumers renting private homes on vacation,” according to the company’s website.
Indeed, the vacation rental industry has seen more growth recently as vacationers have turned to rental homes rather than hotels in search of more space and privacy. “People have figured out that it’s a lot more enjoyable to stay in a big private home than it is to cram the family into a couple of hotel rooms,” quipped Rule.