DVC Right of First Refusal (ROFR): January ’18 Report5 Comments
In the month of January, Disney exercised their right of first refusal (ROFR) on 10 of 275 Disney Vacation Club (DVC) contracts sold through the DVC Resale Market, representing 3.6% of the contracts sold.
At 3.6%, 2018 is staring with a lower buy back rate than where each of the past 2 years finished: 4.4% for 2016 and 6.9% for 2017. Additionally, when comparing buy back rates from January of 2017 to January of 2018, there is an over 60% drop, as January of 2017 saw a buy back rate of 9.5%. This drop in buy back rate is a continuation of what we were seeing in the latter half of 2017 as prices rose, and the buy back rate dropped.
The chart below shows the relationship between the average selling price per point and the buy back rate for 2017 and early 2018. Generally, as price has risen, the buy back rate has declined.
In our last ROFR report for 2017, we were speculating whether Disney would become more aggressive with buying back Grand Floridian, Grand Californian and Polynesian given the substantial direct price increases for those resorts in January, which pushed all 3 over $200/point.
While it doesn’t look they are getting very aggressive with buying back those resorts, they did buy back 1 Grand Californian contract in January, which is 1 more than they bought back the entire year of 2017. So, while Disney may not get aggressive on buying back the three resorts that are now in excess of $200/point direct, the potential for a buy back is there, and it was virtually nonexistent before.
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.
Disney Vacation Club Resort Contracts Bought Back in 2018
Please refer to the graph below for the total amount of buy backs at each DVC resort for contracts sold by DVC Resale Market through the month of January in 2018:
Details on DVC Buybacks
In January, DVC Resale Market had buy backs of Animal Kingdom, Boulder Ridge, Grand Californian, Old Key West and Saratoga Springs. Animal Kingdom led the way with 40% of the buy backs, and notably had a buyback as high as $100/point.
Details on the contracts bought back in January are below:
|Resort||$/Point||Pts. on Contract||Price||Closing Costs Paid by||’18 Dues Paid by||Use Year||Point Availability|
|Animal Kingdom||$100||160||$16,000||Buyer||Pro-Rate||Feb.||84 pts. ’18 + 160 pts.’19|
|Animal Kingdom||$95||160||$15,200||Buyer||Buyer||Feb.||160 pts.’18 + 160 pts.’19|
|Animal Kingdom||$97||220||$21,340||Buyer||Seller||Feb.||0 pts.’18 + 220 pts.’19|
|Animal Kingdom||$99||240||$24,480||Buyer||Buyer||Aug.||240 pts.’18 + 240 pts.’19|
|Boulder Ridge||$93||150||$13,950||Buyer||Seller||Mar.||0 pts.’18 + 150 pts.’19|
|Grand Californian||$165||100||$16,500||Buyer||Buyer||Apr.||100 pts.’18 + 100 pts.’19|
|Old Key West||$82||150||$12,300||Seller||Buyer||Jun.||150 pts.’18 + 150 pts.’19|
|Old Key West||$85||150||$12,750||Buyer||Buyer||Sept.||150 pts.’18 + 150 pts.’19|
|Saratoga Springs||$87||350||$30,450||Buyer||Buyer||Feb.||350 pts.’18 + 350 pts.’19|
|Saratoga Springs||$89||200||$17,800||Buyer||Pro-Rate||Mar.||78 pts.’18 + 200 pts.’19|
Buy Back Rates for Disney Vacation Club Resorts
The table below shows the percentage of buy backs for all 5 different resorts purchased back in January:
|Resort||Buy Backs||Number Sold||Percentage Bought Back|
|Old Key West||2||19||10.5%|