DVC Right of First Refusal (ROFR): May ’17 Report
In the month of May, Disney exercised their right of first refusal (ROFR) on 13 of 182 contracts sold through the DVC Resale Market, representing 7.1% of the contracts sold. This lowers the year-to-date (YTD) buy back rate to 9.2%. While May represented a big change in what was being bought back, it stayed fairly consistent with April’s buy back rate of 6.4%. The 2017 buy back rate remains slightly more than 2x that of the 4.4% buy back rate of 2016. In May, 92.9% of contracts were waived by Disney, bringing the YTD waiver rate to 90.8%.
The two biggest changes in May were the high buy back rates on low point availability contracts and Hilton Head contracts. Prior to May, nearly 80% of the buy backs were contracts with at least nearly all the 2017 points available. In May, only 23.1% of the contracts bought back had high point availability. Price seemed to be much more of a key factor than point availability for buy backs in May.
Hilton Head (HH) buy backs accounted for nearly half of the 13 buy backs in May. 6 out of 10 HH contracts sold through DVC Resale Market were bought back in May. Six buy backs for HH is astonishingly high considering that is more HH buy backs than we have observed in the past 16 months combined. The increase in the rate of Hilton Head buy backs is having a strong impact on the listing price for Hilton Head contracts. In the last two months, the average HH listing price has climbed from an average of $61/pt. to just over $70/pt.
What is Right of First Refusal?
For those new to the concept of Right of First Refusal, it is the option Disney Vacation Club has to purchase any resale contract after a sales price has been agreed upon, and the contract has been executed. Each contract must be forwarded to DVC for review. DVC may take up to 30 days to review the contract. At their discretion, Disney may step in and purchase the property themselves at the terms agreed upon by the Seller and original Buyer. DVC then becomes the Buyer, and the purchase is complete. Once DVC is the buyer there is not an opportunity to come back with a better offer in hopes of still purchasing the contract.
Resorts Bought Back in 2017
Please refer to the graph below for the total amount of buy backs at each DVC resort for contracts sold through the DVC Resale Market.
Details and Data
In May, a big change in direction occurred with buy backs as over 3/4’s of them were low point availability contracts, meaning contracts with zero to very few points remaining for 2017. Previously in 2017, low point availability contracts accounted for just over 20% of the total amount taken through ROFR. Price dominated over point availability for buy backs in May. Hilton Head dominated the buy backs for resorts. This was a big change from anything previously seen, especially when considering there were 6 HH buy backs in May compared to 1 the entire year of 2016. Below is a table including all of the buy backs from May.
|Resort||$/Point||Pts. on Contract||Price||Closing Costs Paid by||’17 Dues Paid By||Use Year||Point Availability|
|Animal Kingdom||$82||160||$13,120||Buyer||Seller||Sep||0 pts.’17 + 160 pts.’18|
|Animal Kingdom||$83||200||$16,600||Buyer||Seller||Sep||12 pts.’17 + 200 pts.’18|
|Animal Kingdom||$81||160||$12,960||Buyer||Seller||Sep||0 pts.’17 + 160 pts.’18|
|Bay Lake Tower||$102||180||$18,360||Buyer||Seller||Jun||0 pts.’17 + 0 pts.’18|
|Beach Club||$100||210||$21,000||Buyer||Seller||Feb||0 pts.’17 + 210 pts.’18|
|Hilton Head||$59||175||$10,325||Buyer||Pro-Rate||Feb||15 pts.’17 + 175 pts.’18|
|Hilton Head||$55||230||$12,650||Buyer||Pro-Rate||Mar||11 pts.’17 + 230 pts.’18|
|Hilton Head||$55||300||$16,500||Buyer||Seller||Jun||0 pts.’17 + 0 pts.’18|
|Hilton Head||$65||70||$4,550||Buyer||Seller||Apr||0 pts.’17 + 0 pts.’18|
|Hilton Head||$54||250||$13,500||Buyer||Pro-Rate||Jun||16 pts.’17 + 250 pts.’18|
|Hilton Head||$59||250||$14,750||Buyer||Buyer||Dec||158 pts.’16 + 250 pts.’17 + 250 pts.’18|
|Old Key West||$77||270||$20,790||Buyer||Pro-Rate||Jun||360 pts.’17 + 270 pts.’18|
|Vero Beach||$57||200||$11,400||Buyer||Buyer||Mar||200 pts.’17 + 200 pts.’18|
Resort Buy Back Rates
There were 6 different DVC resorts to be bought back in May for contracts sold by DVC Resale Market. The table below shows the percentage of buy backs for those 6 resorts.
|Resort||Buy Backs||Number Sold||Percentage Bought Back|
|Bay Lake Tower||1||16||6.3%|
|Old Key West||1||15||6.7%|