When did you know that you had been removed from Solstice LLC? What lessons did you learn from that day?

It was in first week in December of 2008. The Board members voted me out, and I had to leave. But when I left, I left what was at that time still a viable, functioning club. In retrospect, I found it very disconcerting that despite having achieved a certain degree of success over the preceding 5 years no one had bothered to inquire if a plan existed to retire the Fortress debt - by the way - there was. It was not until the day before new management put the club into bankruptcy that I was queried on my intentions!

One of the lessons I learned from that day, that irrespective of the facts and circumstances, there are always people that think they can do a better job than you. I believe there was more than a degree of arrogance, ego and the desire for control on the part of a few that lay at the base of their intentions and actions. What I saw evolve was a small group of individuals that desired to take control of Solstice but seemed to want to avoid the responsibility that, at least I believe, would go hand in hand with the taking of control. In order to justify their actions and absolve themselves from responsibility they would need a scapegoat to blame things on in case things did not work out under their directorship. I was the lucky scapegoat. Actually to be fair, Shay and I were both blamed for all of Solstice's ills ( including the drop in the real estate market). It seems to us we were blamed for exactly the same things we were praised for in the early years of Solstice – me for my real estate and development abilities, her for her exceptional taste and great design creativity.

At the end of the day, I think you do learn far more from mistakes than successes. There are several things I now know about myself that I was not completely aware of prior to Solstice. I am not necessarily a good judge of people. I am far too trusting. I am not built to manage companies. You should never put your personal interests behind others as your sacrifice is rarely appreciated.

So, after a year, what happens to Solstice now?

As stated before I tend to move directly to the bottom line - so here are some of the facts, as I know them, surrounding Solstice from December 2008 to December 2009:

In the spring of 2008, we had about $80M in assets.

At the end of 2009 – we will have simply retired the secured debt ($24M) with the sale of all these assets and nothing will be left for unsecured creditors. As a symbol of the whole demise, I would consider the following transactions: We had a contract to sell one of our homes in Aspen in Nov. of 2008 for a net $6.1M. Subsequently, under the new management in the spring of 09 we sold this same property for a net 3.7M.

What will happen to what’s left of the club is this: in a few weeks the minority Swiss partner in Solstice will purchase the remaining assets of Solstice for the secured debt (cents on the dollar from purchase price) and the members and other unsecured debtors will be left with nothing.

Let me explain further: the Swiss investor and his Geneva based equity group will pay off the Fortress debt, and in return, receive the remaining 9 Solstice Collection properties - fully furnished (this is the same group that took control of the club in Dec. 2008). What is personally most disturbing to me as a fully paid member of the club is the knowledge that this group obviously had the resources to help save or restructure the club at any point over the last year but engaged only at the 11th hour to acquire all the assets at a steep discount. Just 3 months earlier a document was circulated to members estimating a $25M net equity in the club after the secured debt was paid. As a member we will now have the ability to "rent" the properties back from them until the markets improve and the assets are eventually liquidated for what I believe will likely be a substantial profit. There is some language in this rental agreement that under certain circumstances could return some funds to the members if they commit and continue to pay rent for a certain time frame but this member is not holding his breath. Members have been asked to make a two year commitment on rent ($40-$86k per year ). I am aware of some members that consider this a reasonable outcome - I am not one.

With all that has happened to you, do you have ideas for models out there that could possibly work?

There are two models that in my opinion hold some promise in today's market. One, where you can put your home in a large pool of similar homes, pay a small membership fee, and travel to those homes anytime - you keep control of your asset. And two, a "closed end" fund where properties were bought, used and held for a pre-determined time by a group and then liquidated in a window of time that would allow for capturing the appreciation.

As regards to all that has not worked thus far in the DC industry: top of the list is "things often cost more than you think." This applies to both the operation and development side - I believe the often inaccurate modeling of these costs to be the Achilles Heel of the industry. We addressed this by having a very bare bones approach early on and were successful. However, if you want to scale this and do not immediately generate a very high velocity of sales you can have problems.

In hindsight, the cost of acquiring a member is likely not too dissimilar to the sales and marketing costs associated with selling a time share - it might be somewhere closer to 40% than 20% depending on the size of the organization. I am unaware of any club that has a financial position I would want to replicate today. I think it will be very challenging environment to sell memberships over the next 24 months - if not longer.

Are there any clubs you would buy into at the moment?

Personally, after my experience, I am currently not a candidate for club membership.