Ship to sail as condo Still just a promise, the World offers the world at a price


December 08, 1997|By NEWSDAY

Imagine buying a condominium for as much as $5.4 million before you've even seen a model, because nothing has been built yet. Once it's finished, you'll move from place to place, but at times, a helicopter will be your only way to leave home. Maintenance could cost you as much as $22,500 a month. And you may occasionally feel queasy.

But the package comes with no property taxes to pay and allows you to see the world without leaving home.

Welcome to the World of ResidenSea, a ship turned condo conceptualized by an international team of experienced cruise and real estate professionals and marketed by Christie's Great Estates. The first of its kind anywhere, the project is being studied by those in the cruise line and real estate industries, some of whom raise concerns about matters ranging from the ship's upkeep and life span to the company's ability to pay the $475 million in construction costs. The World, as it is known, will provide 250 apartments to passengers around the globe. Residents will buy the rights to live in their apartments, as maritime law prevents the company from carving up the ship among 250 owners.

Construction is to start early next year at a shipyard in Europe.

Robert Burnett, president of ResidenSea (USA) Inc., dismissed the worries and questions surrounding the project, saying the plans are "striking a very basic chord with our market."

"It takes all the hassles out of travel, while preserving the excitement and variety," said Burnett, who has been in the resort and real estate business for 20 years.

The World at ResidenSea has a niche that analysts said is separate from the cruise and second-home markets. But the strength of both is important to the project's success. Joyce Minor, a lodging and leisure equity research analyst with Lehman Brothers, said the cruise industry is "young and growing, with a long way to go before it gets anywhere near maturity."

She said most of those who would buy a World apartment are wealthier than typical cruise fanatics. Minor said, "It's a whole new level of luxury."

Burnett said ResidenSea has already secured $50 million in binding contracts and $100 million more in reservations. More than 25 apartments have been claimed. Most owners will use their homes for a few months, renting them out the rest of the year, Burnett said.

Those buyers are making commitments based solely on a brochure and the promise of the real thing. "For a lot of people, this is less expensive than having their own yacht," said Doreen Niggles, a sales associate with Allan M. Schneider Associates in East Hampton, N.Y.

Still, the cruise ship's life span and upkeep have raised particular concern among cruise ship and real estate experts. ResidenSea representatives said the ship wouldn't need an overhaul for about 50 years. But others said ships begin deteriorating in one-fifth of that time.

One critic is Mike Thiel, who presides over Hideaways, a New Hampshire-based upscale travel club that specializes in vacation villas and cruises. "They're out in a severe environment, and so they're fairly worn and tired after 10 years," Thiel said.

The project requires substantial additional financing beyond buyers' contributions, Burnett admitted, noting that some funds are coming from ResidenSea executives and shareholders, along with outside sources.

The World at ResidenSea was the brainchild of Knut Kloster Jr., who, under the umbrella of Kloster Cruise Ltd., has served as chairman and chief executive of Norwegian Cruise Line, Royal Cruise Line and Royal Viking Line.

Kloster Cruise has suffered some financial difficulties over the years, but the Coral Gables, Fla.-based company has begun to turn things around financially, completing a debt refinancing and selling some assets.

Kloster's roots in the industry go back to his father, Knut Kloster Sr., who founded Norwegian Cruise Line.

Kloster Sr. in 1987 tried his own innovative concept for a ship called America World City. Meant to be a business convention and meeting site, it has not been built yet because New York City-based World City Corp. is still trying to obtain financing.

Those at ResidenSea, including Kloster Jr., believe that the World will not face the same delays -- and are planning its maiden voyage for the summer of 2000.

Proposed World of ResidenSea

Ship: 958 feet long with 15 decks. Cruising speed of 20 knots. Will cater to 650-700 residents and guests, but holds up to 1,700 for short, international voyages. Registered in the Bahamas.

Crew: 500 full-time employees, with Norwegian marine officers and captain, and European and U.S. staff.

Residences: 250 residences ranging from 1,100 to 3,200 square feet. Also, 180 smaller guest suites.

Cost: $1.2 million to $5.4 million. Maintenance fees: $60,000 to $270,000 a year.

Residents: Half are American, 25-40 percent European with an average age of 55.

Itinerary: Ship will average 250 days a year in various ports. After first two years, residents' board will determine travel plans.

Amenities: Three decks of entertainment, dining, activities and shopping. Seven restaurants, a golf facility, tennis court, two swimming pools and a health spa. Also, a helicopter landing pad, art exhibitions, hanging gardens, beauty salon, movie theaters and casino. Access to the Internet, mobile phones and fax machines.

Medical care: Doctors and nurses on call 24 hours, X-ray and operating facilities, a pharmacy and various specialists.

SOURCE: ResidenSea Ltd.

Pub Date: 12/08/97

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