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Old 11-22-2012, 09:01 AM   #1
Jasonkat
Mouseketeer
 
Join Date: Nov 2012
Posts: 149

Valuing loaded and stripped contracts

I've read through this section and I haven't seen this brought up. How do you value a loaded contract, regular contract, or a stripped contract?

Let's suppose you're looking at AKL, I've seen that the average sales price tends to be $65 per point (somewhere on this site I saw that listed). How do you value these three types of contracts?

Loaded example
AKL 200 points July use year, 2013 400 points available, 2014 200 points available....

My assumption is that you take 200 points * $65 = 13,000 but then you must assign a value to the 200 banked points, so if you can rent points for $10 per point that means the banked points are worth 200 * $10 = 2,000.

This gives you a fair value of $15,000.


Regular example
AKL 200 points July use year, 2013 200 points available, 2014 200 points available....

My assumption is that you take 200 points * $65 = 13,000 and then there's no more work to do because there aren't extra points.

Fair value of $13,000


Stripped example
AKL 200 points July use year, 2013 0 points available, 2014 200 points available....

My assumption is that you take 200 points * $65 = 13,000 and then you have to deduct an amount for "Renting" the 2013 points to make it equivalent to a regular contract. So if you can rent for $10 you get 200 * $10 = 2000. You deduct this $2000 from the $13,000 and you get $11,000.

Fair value $11,000.


The reason I'm asking is I made an offer for an AKL 250 point loaded contract (500 pts coming in 2013, 250 in 2014) at $16,000 ($64 per point). My offer was rejected. So I'm curious if I need to add a value to those banked points and how I come up with a "fair" offer for this contract.
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