ROFR Buybacks

[MountainMouse]

Just had a question I thought someone here could probably answer. When Disney takes a contract back through ROFR or any other means can they re-sell the points in different increments. In other words, if they take a 200 point contract can it be sold as two 100 point contracts? If yes, it's seems like they would prefer larger lower cost contracts.

 

[OKW Lover]

When DVC exercises ROFR the associated points just go into a general pool to be resold. The can be bundled into any size contract DVC feels like selling.

I'd guess the larger contracts are a little more "attractive" than small contracts for DVC to exercise ROFR since it takes the same amount of administration (read $$$) to buyback a small contract as a large one.

 

[disneynutz]

For Disney it's all in the numbers. No emotion, they don't get excited, they just want to make money.

If they have buyers waiting for certain points, they ROFR if the numbers are right. They prefer to sell new projects and may sit of selling older resorts hoping to get buyers to purchase the new projects instead.

Bill

 

[MountainMouse]

Thanks, understand it's all about the money. Just wondered about the restructuring of contracts to different point totals.

 

[LisaS]

In your example, if Disney bought back a 200-pt contract, they could break that contract up and sell it in smaller increments. For example, those points could end up being sold as a 50-pt, two 25-pt, and one 100-pt contract, all with the same resort, UY and Unit number as the original.

If Disney buys back more than one contract from the same Unit number within a resort, they could combine those into a larger contract. I sometimes wonder if the seeming randomness of ROFR is due to Disney snapping up a contract from a particular Unit so that they can combine it with another (small, leftover) contract from the same Unit to make a larger one to resell.

For example, imagine Disney has 10 or 20 points left over from breaking up a larger contract. While it has happened that someone was sold an add-on that consisted of two contracts (one for 10 points, the other for N-10 points) I imagine Disney would prefer not to do that. So if they see another contract for the same resort and Unit number during their ROFR review, they might be more inclined to take that one so that they can combine it with the 10 points they had left over to create a larger contract that can then be broken up into pieces of 25-points and larger. As far as I know, they can only do this with contracts that are from the same Unit number within the resort.

Of course now that Disney rents points to members at $15 a pop, those little leftover contracts are nice little money makers for them so this may be less of a concern than it was in the past.

 

[OKW Lover]

Once DVC buys a contract the points no longer have an association with anything else. They all go into a pool and DVC can sell any of them, in any amount they care, to a buyer looking for that property.

 

[LisaS]

Once DVC buys a contract the points no longer have an association with anything else. They all go into a pool and DVC can sell any of them, in any amount they care, to a buyer looking for that property.

I don't believe that is the case. When I first contacted DVC, I wanted BWV, Oct UY. They had BWV points in other UYs (Sep for example) but I wanted Oct, so they offered to contact me when they had Oct UY points available. They could not turn BWV Sep UY points into BWV Oct UY points.

More specifically, each contract is tied to a specific Unit within the resort. Each Unit has a total number of points associated with it, all of which are the same UY. I don't believe they can arbitrarily move points from one Unit to another. Also, I have never heard of someone buying a contract with points that came from more than one Unit. They can cut a contract from a particular Unit into smaller pieces (or combine two or more contracts from the same Unit into one large contract) but I don't think they can change the Unit the points came from nor the original UY of points they acquire through ROFR.