Frequently Asked Questions
What is fractional ownership?
Fractional ownership is an increasingly popular choice for those who want guaranteed access to a high-value asset like a private jet, villa or yacht while keeping capital and running costs affordable. By buying a fraction – either 5% or 10% – of a Royal Falcon yacht, the fractional owner is entitled to a given number of weeks exclusive use of a fully crewed and superbly maintained mega-yacht in the most desirable cruising locations of the world, all for a fraction of its total price and running costs.
How do I sign up to Royal Falcon Yachts’ (RFY) fractional ownership programme?
The purchasing process could not be easier. Royal Falcon Yachts offers a risk-free package to fractional owners, with an initial deposit and phased payments into a dedicated escrow account while their chosen yacht is being constructed. Further details can be found in Royal Falcon Yachts draft contract. Once delivery has taken place, fractional owners will be billed once a year for management and maintenance.
How much does each fractional ownership cost?
For Royal Falcon Yachts’ launch model – the super luxury RFF 135 catamaran mega yacht – the price is €35m for outright ownership. A 10% fractional ownership costs €4m and entitles the owner to four weeks hassle-free cruising, initially focused on the Mediterranean and the Caribbean, with other locations becoming available as the Royal Falcon fleet grows. A 5% fractional ownership costs €2.3m and gives the owner two weeks cruising a year. RFY will themselves retain a 20-30% stake of each yacht, bringing the total up to 100% or 40 weeks annual cruising. The remaining 12 weeks of the year will be used for maintenance, relocation and chartering.
How are these weeks allocated?
Royal Falcon 5% fractional owners will have 2 x 1 week cruise times allocated to them. The choice of weeks will rotate each year to ensure a fair distribution among all fractional owners. For example, in Year 1, you might spend Week 1 in the Caribbean and Week 25 in the Mediterranean; in Year 2, your allocation would be Week 2 in the Caribbean and Week 26 in the Mediterranean.
The 10% fractional owner will be able to enjoy 4 weeks of (2 x 1 week and 1 x 2 week) cruises annually. In Year 1, you might spend Week 3 in the Caribbean, Weeks 28 and 29 in the Mediterranean and Week 45 in the Caribbean. In Year 2, your allocation would be Week 4 in the Caribbean, Weeks 29 and 30 in the Mediterranean and Week 46 in the Caribbean. Each fractional Owner would know exactly which weeks are allocated to him in which year allowing him to make his plan well in advance.
When does my week begin?
Fractional owners would be able to board their vessel any time after 5pm on a Sunday afternoon and leave it before 5pm on the following Saturday, allowing the yacht to be cleaned and re-provisioned before the next cruise.
What if I don’t want to use all my allocated weeks?
All fractional owners are free to charter out unused portions of their entitlement through Royal Falcon Yachts’ management service, and receive the net charter income.
What might I earn if I charter out my unused weeks?
We expect owners to be able to realise charter income of €245,000 or more per week in high season and €150,000 in low season for a state-of-the-art mega yacht such as the RFF 135.
Is it difficult to charter out of season?
Not necessarily. While summer in the Mediterranean and winter in the Caribbean remain the periods of choice for many, quite a number of customers prefer the pleasures of off-peak cruising and there is a steady demand throughout the year from corporate clients.
How soon will Royal Falcon Yachts add new vessels, models and destinations to its range?
The first 2 Royal Falcon Yachts - RFF 135 mega yachts are currently under construction. RFY will commence its commercial service in 2011. Thereafter, the fleet is expected to grow by at least 1 to 2 vessels per year, or more depending on demand. In addition, Royal Falcon intends to widen its range by introducing the RFF 211 mono-hull, whose details can be seen on the RFF website. RFF and Porsche Design are also considering adding a brand new sailing mega yacht to the fleet. Initially, RFY will offer the Mediterranean and the Caribbean as cruising destinations. As the fleet grows, further locations will be added. The long-term aim is to establish more than 100 yachts in a dozen prime locations around the world. All existing RFY fractional owners will be able to access any of these vessels on a pro rata basis, as and when they become available. They will also be able to widen their choice of cruising destinations as more yachts are added.
How long is the fractional ownership contract for?
For each yacht, RFY sets up a wholly-owned subsidiary and places the yacht in that company. As they buy into this company, fractional owners become proportionate stakeholders – thus a 10% fractional owner will own a 10% stake in this single purpose company (SPC). RFY will have a standard contract with each SPC to regulate management and maintenance. To keep each yacht in tip-top condition, none will be allowed to exceed 8 years in age. Consequently each fractional ownership contract will last 8 years, after which the vessel will be sold and the proceeds distributed among the fractional owners of the company. Any surplus income over management and maintenance costs over this 8 year period will also be distributed pro rata at this point. Those wishing to continue as fractional owners will be offered the chance to enter into a new contract at preferential rates. Fractional owners who may have signed their contract only after the entry into service of a particular vessel will be entitled to continue the remainder of their 8 year term on a successor vessel.
Can I sell my stake before the 8 years are up?
Fractional owners are free to sell their share at any stage. There is no obligation to remain in the Royal Falcon Yachts fractional ownership programme for the full eight years.
How much will the yachts be worth after 8 years?
On current market trends, we expect these class-defining yachts broadly to maintain most of their value throughout their eight years.
How is management and maintenance handled?
Royal Falcon Yachts will run a dedicated management service to ensure that their yachts are kept in peak condition, carrying out all necessary repairs and upgrades, repositioning them according to need, and recruiting and retaining crew of the highest calibre. In this way, Royal Falcon Yachts will relieve fractional owners of the day-to-day burden of keeping their valuable asset running perfectly and looking its best. Of the 12 week annual “downtime” for each yacht, we expect that the yacht could be available for charter for between 4 and 5 weeks; the profit from such charters will be credited to the SPC which holds the title to the yacht.
How much does it cost?
Maintenance and management costs are expected to be of the order of €2.5m per year. 10% fractional owners can expect to pay €250,000 per year and 5% fractional owners €125,000 annually to the SPC holding the title to their yacht.
What does the annual maintenance charge cover?
To ensure trouble-free cruising, Royal Falcon Yachts will offer a full level of service covering:
• Regular maintenance and servicing, spare parts, engine and systems overhaul;
• Recruitment, management and payment of a fully trained crew of 8-10 for each RFF 135 yacht;
• Any major repairs, dry-docking, and refits as may become necessary;
• All insurance costs;
• Cross-Atlantic repositioning between the Mediterranean and the Caribbean, and in due course other regional repositioning when this becomes appropriate;
• All other operational expenses for the yacht.
Fractional owners will only need to cover their own immediate expenses such as food, drink, fuel, telecommunications and mooring charges.
What about repositioning?
Cross-Atlantic or other regional repositioning will be the responsibility of Royal Falcon Yachts and the costs are included in the annual maintenance charge. Each RFY yacht will be allocated a home base – initially in the Mediterranean or the Caribbean - where fractional owners will be able to board and disembark from their vessel.
What steps have Royal Falcon taken to minimise credit risk for fractional owners?
The Royal Falcon Yachts fractional ownership programme has been designed to protect fractional owners against bankruptcy by Royal Falcon Yachts and default by another fractional owner.
*This information is intended solely to illustrate a number of topics relating to the Fractional Ownership Programme and is not intended to be comprehensive. No rights whatsoever may be derived from this information and Royal Falcon Yachts is not liable for any damage which may arise as a result of any incorrectness or incompleteness of the information included herein. Royal Falcon Yachts may freely change any information without prior notice.