Extensions on 2042 Contracts?

[starstruck93]

Hmmmmm..... I'm trying to locate the length of my contract but can't find it. I think it was 50 years; I purchased BLT in 2009. April

 

[Ben E N]

Hmmmmm..... I'm trying to locate the length of my contract but can't find it. I think it was 50 years; I purchased BLT in 2009. April

Yep. 2060 expiration. 42 more jolly good years remaining!

 

[starstruck93]

Yep. 2060 expiration. 42 more jolly good years remaining!

LOL! Awesome! Thanks so much for your help! April

 

[_auroraborealis_]

The problem with just offering a cash extension on BCV is that would not allow for adding points and redoing the point charts. BCV has really low cost-per-night-per-unit for what it is.

Even making the points more equivalent to BLT LV (as opposed to going all-in and making the points more like VGF) would add a lot of points to the BCV association. In Adventure Season, BCV is 107/197/271 for a week. BLT is 123/227/296. If you follow that across seasons and also figure in number of units, that is a lot of potential money re-sold as a new 50-year association.

 

[Dean]

There's no way they would extend BCV for anything less than $115 for 15 years. Current prices having it costing $7.40 per year. $115 / 15= only $7.66 per year. A bargain in Disney's minds. More likely it would be in the $200 range, but then some people would decline to extend.

We'll have to agree to disagree. The years at the end have a much lower value than the ones currently.

 

[Ben E N]

We'll have to agree to disagree. The years at the end have a much lower value than the ones currently.

3 things about that.
1. As the BCV contract has come closer to its current end, the price per year has gone up, even more significantly than at other resorts.
2. I really doubt they offer an extension at all. They will instead sell it as a new property with a reworked price structure. The only way they would not do that is if they made more money off of an extension, which would have to mean sky high prices.
3. If any decision gets made, it will not happen for years, and I really doubt they take either of our opinions into consideration when they do decide what to do. Fun to think about, though.

 

[Cyberc1978]

Just out of curiosity when a resort "expires" is it only the land lease that expires and does that include any buildings?

I dont know how it works more specifically but if only the land lease expires then "technically" the owners still owns the buildings right?

 

[Dean]

Just out of curiosity when a resort "expires" is it only the land lease that expires and does that include any buildings?

I dont know how it works more specifically but if only the land lease expires then "technically" the owners still owns the buildings right?

We don't really own the buildings, just the use until the end of the RTU. That membership expires with the land lease and is contractually tied to it. That's why the OKW extension as such a problem and why they threatened a special assessment since they didn't really have any way to enforce it or open it up to only certain people. They extended the land lease and in effect, they extended ALL owners by doing so. As I read the contractual info, someone who didn't sign it back over to DVC would still be extended even if they didn't pay for the extension but I'm sure DVD would throw their legal weight around if it came to that. I can assure you had I still owned OKW at the time this came about, I would not have sold and would not have extended and tested the theory.

 

[Dean]

3 things about that.
1. As the BCV contract has come closer to its current end, the price per year has gone up, even more significantly than at other resorts.
2. I really doubt they offer an extension at all. They will instead sell it as a new property with a reworked price structure. The only way they would not do that is if they made more money off of an extension, which would have to mean sky high prices.
3. If any decision gets made, it will not happen for years, and I really doubt they take either of our opinions into consideration when they do decide what to do. Fun to think about, though.

That's best case scenario if the planets align. It assumes the economy sizzles along and Disney doesn't hit a political snag. In reality we'll likely have 2 or 3 downturns in the economy between now and 2042. But my estimate of value was based on reasonable future, not in 20 years. I go back and forth on extensions. They have to do so MUCH differently than they did OKW but I don't think they'll single out BCV, they'll basically look at the resorts as a whole of how best to handle the situation. They're not going to micromanage reselling BCV, extending BRV, etc. They'll almost certainly treat all resorts the same way and that will be a window on the later RTU options. People talk about extensions like it'll be a great deal if offered, I think the chances of that are extremely low unless they have a short term special trying to get a critical mass of extenders.

The assumptions in your post remind me of the assumptions on smaller contracts thinking they'll always be worth more and sell easier. I'd say that's a 50/50 proposition at best.

 

[Ben E N]

That's best case scenario if the planets align. It assumes the economy sizzles along and Disney doesn't hit a political snag. In reality we'll likely have 2 or 3 downturns in the economy between now and 2042. But my estimate of value was based on reasonable future, not in 20 years. I go back and forth on extensions. They have to do so MUCH differently than they did OKW but I don't think they'll single out BCV, they'll basically look at the resorts as a whole of how best to handle the situation. They're not going to micromanage reselling BCV, extending BRV, etc. They'll almost certainly treat all resorts the same way and that will be a window on the later RTU options. People talk about extensions like it'll be a great deal if offered, I think the chances of that are extremely low unless they have a short term special trying to get a critical mass of extenders.

The assumptions in your post remind me of the assumptions on smaller contracts thinking they'll always be worth more and sell easier. I'd say that's a 50/50 proposition at best.

I just want to make it clear that the only assumption I am making is that Disney is looking to make the most money they can. Anything beyond that is just wild speculation. Fun to do, but nothing to be taken too seriously. There are waaay too many variables in play, some that we are not yet even aware of yet. For all we know, Disney will sell off their theme park division to foreign investors within the next 10 years. I doubt it, but wouldn't bet against anything.
Trying to predict what will happen with DVC in 15 years is like trying to predict the weather in Wichita, KS on July 23, 2022. You can make an educated guess based on historical data, but it is still nothing more than a guess.

 

[Wakey]

As to owning the buildings when the lease expires- no, that will revert to the owner of the land. You only bought a part lease in a building.

Re OKW extension, one guy has already said ( may even have been on here, but it was some time ago), that he refused to extend and refused to sign the paperwork releasing the extended interest. He reported he was constantly cajoled by employees to speak to them when he visited site. In the end he got his lawyers involved, who said he'd bought what he'd bought, he has no obligation to sign anything and Disney should cease immediately contacting him. Apparently they did.

 

[chalee94]

Re OKW extension, one guy has already said ( may even have been on here, but it was some time ago), that he refused to extend and refused to sign the paperwork releasing the extended interest. He reported he was constantly cajoled by employees to speak to them when he visited site. In the end he got his lawyers involved, who said he'd bought what he'd bought, he has no obligation to sign anything and Disney should cease immediately contacting him. Apparently they did.

Yep - I bet Disney altered the contract language for new resorts after the trainwreck of the OKW extension, but for resorts that opened before that (like BCV), I would guess Disney doesn't want to risk more of that type of mutiny (which is part of why I am betting against an extension for BCV and other earlier resorts - although as Dean says, there may be ways around it by tying the extensions to new purchases or something).

 

[Wakey]

This is interesting also

Responding to a complaint relating to the extension of OKW to 2057, DVD has agreed to provide a developer subsidy to all members who elect to not participate in the extension. The Executive Counsel for WDW, John McGowan stated:
"....we agree that members who elect not to extend should not be required to fund capital repairs after 2042. However, Section 721.13(3)(c)(3), F.S., provides that full funding of reserves can only be waived by a majority of the members. Consequently, as part of the OKW Extension, DVD, as developer, has already agreed with the association to provide a developer subsidy at the appropriate time (the association is obviously not yet funding capital reserves for capital replacements after 2042) to all members who elect not to participate in the OKW Extension. The purpose of the developer subsidy is to pay a portion of such member's capital reserve assessments in an amount sufficient to fully fund capital reserves and to relieve all such members of the obligations to fund capital replacements after 2042. Thus, DVD has committed to the association that neither.....nor any other members who elect not to extend will pay any reserve assessments for capital improvements made after 2042

 

[CraigInPA]

Just out of curiosity when a resort "expires" is it only the land lease that expires and does that include any buildings?

I dont know how it works more specifically but if only the land lease expires then "technically" the owners still owns the buildings right?

A land lease conveys use of the land for a specific period of time. Any "lease holder improvements" (buildings, landscaping, etc...) revert to the land owner at the end of the lease. The question is whether the land lease from Disney to DVD ends in 2042, or was a 99 year lease? If it's longer, and I suspect it is, DVD will continue to own the buildings and can re-offer them.

 

[Wakey]

A land lease conveys use of the land for a specific period of time. Any "lease holder improvements" (buildings, landscaping, etc...) revert to the land owner at the end of the lease. The question is whether the land lease from Disney to DVD ends in 2042, or was a 99 year lease? If it's longer, and I suspect it is, DVD will continue to own the buildings and can re-offer them.

Correct and given DVD is a Disney company they will obviously do whatever makes them the most money. Which at this current time looks like it will be redeveloping or refurbishing and re selling.

 

[SpaceMountain77]

Prior to the construction of Aulani, I had assumed that Disney would sell the Hilton Head Island and Vero Beach resorts at the end of the land lease. However, now, Aulani likely helps their stay in the DVC system. It would seem odd to have a WDW and DLR presence with a single stand alone resort in Hawaii. Even if there are only three stand alone resorts, they can continue market them collectively as Disney beach resorts.

 

[tjkraz]

Prior to the construction of Aulani, I had assumed that Disney would sell the Hilton Head Island and Vero Beach resorts at the end of the land lease. However, now, Aulani likely helps their stay in the DVC system. It would seem odd to have a WDW and DLR presence with a single stand alone resort in Hawaii. Even if there are only three stand alone resorts, they can continue market them collectively as Disney beach resorts.

The problem is the time and expense involved in selling those millions of Vero & HHI points again. At its inception, Disney thought they needed a diverse portfolio to compete with more established timeshare systems. 25+ years of sales history is now showing that nearly all demand lies in the theme park destinations. Most people are content to use their points exclusively for park resorts, while RCI, BVTC and other programs are appealing enough for non-park visits...at least during the sales pitch.

With Aulani, Disney execs convinced themselves that the program was established enough to revisit the non-park approach. If they did the resort “right” (on the beach, spare no expense) they could make a Hawaii destination work. Now we’re 8+ years into sales with no end in sight.

I would expect DVC to survey existing owners late in the process, see how many are interested in extending/re-buying at Vero and Hilton Head. If they can’t rely on existing Vero/HHI owners to stick with the resort, the outlook seems particularly bleak. Today people struggle to get $70 per point for Vero resale, and the dues are/will be astronomical.

I just don’t know where DVC is going to find 10k+ families willing to spend $300 per point for 50 years of ownership at those resorts. They could sell for a lower price than a theme park resort, but then DVC is taking a lower profit margin on a product that requires as much, if not more resources to sell than a park resort. It’s entirely possible they will be re-selling both BoardWalk and Beach Club points at the same time.

It wouldn’t shock me if DVC kept Vero & HHI, but personally I’d bet against it.

 

[SpaceMountain77]

I would expect DVC to survey existing owners late in the process, see how many are interested in extending/re-buying at Vero and Hilton Head.

In time, I will let you know if I receive a survey

 

[chalee94]

Why would you personally be against it?

I believe that you missed a letter there.

(I would bet against VB also. HHI is harder to say.)

 

[Dean]

I believe that you missed a letter there.

(I would bet against VB also. HHI is harder to say.)

My bet is they are a set in this regard. HHI is a better option to sell off intact as a timeshare than VB.