DVC Right of First Refusal (ROFR): April ’17 Report20 Comments
In the month of April, Disney exercised their right of first refusal (ROFR) on 14 of 220 contracts sold through the DVC Resale Market, representing 6.4% of the contracts sold. This lowers the year-to-date (YTD) buy back rate to 9.6%. April marked the 2nd month in a row for the buy back rate to drop, pushing the YTD buy back rate back to single digits for the first time since January. Despite two straight months of declines, the 2017 buy back rate is still more than 2x that of the 4.4% buy back rate of 2016. In April, 93.6% of contracts were waived by Disney, bringing the YTD waiver rate to 90.4%.
As mentioned in earlier ROFR reports this year (January, February and March) a likely reason for the higher buy back rates so far in 2017 is due to Disney’s $5/pt. increase on all DVC properties in January, and the opportunity to buy back resales with prices at 2 year lows. However, as DVC resale inventory has shrunk significantly since the beginning of 2017, the resale market has seen a steady increase in prices. This increase in prices could possibly be the main contributor in Disney’s buy back rate dropping for two consecutive months. April’s buy back rate was roughly 57% lower than February’s rate and 15% lower than March’s rate.
What is Right of First Refusal?
For those new to the concept of Right of First Refusal, it is the option Disney Vacation Club has to purchase any resale contract after a sales price has been agreed upon, and the contract has been executed. Each contract must be forwarded to DVC for review. DVC may take up to 30 days to review the contract. At their discretion, Disney may step in and purchase the property themselves at the terms agreed upon by the Seller and original Buyer. DVC then becomes the Buyer, and the purchase is complete. Once DVC is the buyer there is not an opportunity to come back with a better offer in hopes of still purchasing the contract.
Resorts Bought Back in 2017
Please refer to the graph below for the total amount of buy backs at each DVC resort for contracts sold through the DVC Resale Market.
Details and Data
While 9 of the 14 contracts bought back in April had strong point availability, meaning the contracts had all or almost of the 2017 points and all points going forward, price remained a factor as well. The remaining 5 of the 14 contracts bought back with low point availability seemed to be targeted due to price. For example, a 320 point Bay Lake Tower was bought back at $106/point, and a Boulder Ridge contract was bought back at $84/point. Both contracts had no points coming until 2018. Surprisingly, 2 Hilton Head contracts were bought back in April as well. While 2 does not sound like a lot, that was double the amount of Hilton Head contracts we saw bought back the entire year of 2016. For a complete list of the buy backs in April, please see the table below.
|Resort||$/Point||Pts. on Contract||Price||Closing Costs Paid by||’17 Dues Paid By||Use Year||Point Availability|
|Animal Kingdom||$88||160||$14,080||Buyer||Buyer||Dec||33 Pts. ’16 + 160 Pts. ’17 + 160 Pts. ’18|
|Animal Kingdom||$85||160||$13,600||Buyer||Buyer||Dec||135 Pts. ’16 + 160 Pts. ’17 + 160 Pts. ’18|
|Bay Lake Tower||$106||320||$33,920||Buyer||Seller||Dec||320 Pts. ’18|
|Bay Lake Tower||$119||160||$19,040||Buyer||Buyer||Aug||2 Pts. ’16 + 320 Pts. ’17 + 160 Pts. ’18|
|Bay Lake Tower||$109||170||$18,530||Buyer||Buyer||Jun||49 Pts. ’17 + 170 Pts. ’18|
|Boardwalk||$96||150||$14,400||Buyer||Seller||Feb||150 Pts. ’18|
|Boardwalk||$98||220||$21,560||Buyer||Buyer||Aug||252 Pts. ’17 + 220 Pts. ’18|
|Boardwalk||$99||270||$26,730||Buyer||Buyer||Aug||270 Pts. ’16 + 540 Pts. ’17 + 270 Pts. ’18|
|Hilton Head||$58||270||$15,560||Buyer||Pro-Rated||Dec||256 Pts. ’17 + 270 Pts. ’18|
|Hilton Head||$52||200||$10,400||Buyer||Seller||Apr||200 Pts. ’18|
|Old Key West||$71||230||$16,330||Buyer||Buyer||Sep||230 Pts. ’17 + 230 Pts. ’18|
|Saratoga Springs||$83||175||$14,525||Buyer||Buyer||Aug||194 Pts. ’17 + 175 Pts. ’18|
|Vero Beach||$46||250||$11,500||Buyer||Buyer||Feb||250 Pts. ’17 + 250 Pts. ’18|
|WL: Boulder Ridge||$84||170||$14,280||Buyer||Seller||Jun||170 Pts. ’18|