# Recent ROFR activity



## GregT (Aug 11, 2013)

All,

I've heard from different brokers that Marriott has significantly increased its ROFR activity.   Dioxide's database has 31 entries since June 1, 2013, and 13 of them are failed transactions.  2013 in general has a much higher ROFR pace than previous years (which is not unexpected) but I thought almost 50% failed transactions was higher than I expected.

Interesting -- I'm still in limbo at the moment on my Trust Points transaction because the BK Trustee is slow, and Marriott hasn't provided the estoppel information yet so I can confirm the Trust Points are free and clear.   I'm very curious to proceed with this transaction, but continue to assess the landscape in case this package is not free and clear and I have to try again.

Will keep TUGgers apprised.  

Best,

Greg


----------



## GregT (Aug 11, 2013)

A little more data:

Activity from:

June 1, 2013 to August 10, 2013:  31 transactions reported, 13 ROFR'd -- (42% failure rate)

January 1, 2013 to May 31, 2013:  32 transactions reported, 9 ROFR'd -- (28% failure rate)

January 1, 2012 to Dec 31, 2012: 63 transactions reported, 9 ROFR'd -- (14% failure rate)

Three years 2009, 2010 and 2011: 262 transactions reported, 6 ROFR'd -- (2% failure rate)

Interesting stuff...

Best,

Greg


----------



## GregT (Aug 11, 2013)

Woo Hoo!  I have my own thread!

Looking back at the hot days of 2006/2007/2008 (pre September 2008 when world changed), Marriott ROFR'd approx. 24% of the sales (49 out of 205).  

Interesting that 2013's ROFR activity is higher than has previously been recorded in Dioxide's database - and recent activity is much higher.  

Best,

Greg


----------



## GaryDouglas (Aug 11, 2013)

What's your source of data, besides Dioxide's DB...?


----------



## sb2313 (Aug 11, 2013)

*Sorry to interrupt!*

While reworking my Marriott holdings 3/3 of my annual weeks I sold were excersised on. Marriott did pass on the eoy year one along with the eoy week I bought, and the eoy my coworker purchased. So there seems to be a trend, especially since Marriott doesn't make buyback offers on eoys as far as I know.


----------



## GregT (Aug 11, 2013)

GaryDouglas said:


> What's your source of data, besides Dioxide's DB...?



The only data I have is what is reported on Dioxides database.  Thx


----------



## mjm1 (Aug 11, 2013)

Greg, thanks for the analysis.  It is interesting to see the uptick, which we assumed would happen as Marriott would likely want to expand it's holdings at properties where trust inventory is not as robust.  As another person mentioned, I noticed that Marriott is passing on EOY, which is what we have in process.  Like you we are waiting on the entire process to be completed.  The trustee in our BK case has been out of the country on vacation, so that has slowed things down.  It will be interesting to see how Marriott moves regarding ROFR going forward.  Selectively I am sure.

Mike


----------



## dioxide45 (Aug 11, 2013)

GregT said:


> Woo Hoo!  I have my own thread!
> 
> Looking back at the hot days of 2006/2007/2008 (pre September 2008 when world changed), Marriott ROFR'd approx. 24% of the sales (49 out of 205).
> 
> ...



Greg, This is rather interesting. It seems that MVCI has a renewed interest in ROFR and now is definitely different than pre 2008. I think they are rather constrained still with growth of organic inventory. They are working on tower 3 at Grand Chateau but really have no other active projects at the moment to add new inventory to the trust. They do expect to begin construction on a number of their other unfinished projects; Crystal Shores, Lakeshore Reserve, but I think they are trying to acquire weeks to ensure they don't run out of inventory to sell before they can get these new weeks in to the trust.

Pre 2008 things looked great, they had plans for a number of resorts to be built so weren't heavily relying on ROFR and buyback.


----------



## GregT (Aug 12, 2013)

All,

I suspect we will be seeing more ROFRs in the coming days.  A few other observations -- again focusing on the last two months.  Note that this is a very small sample size (31 reported transactions), but interesting.

One of the things that we've discussed on TUG before is a metric to predict what a week might be ROFR'd at.  From the Points Values spreadsheet (linked below), we know how many Trust Points Marriott gets (basically the same as our skimmed points).  We know they can sell those points for $10 each -- so is there a pattern of what does/does not get ROFR'd?  

31 weeks reported on Dioxide's database.

Of these 31 weeks, 13 were ROFR'd.

All 13 weeks were Annual weeks, with a ROFR metric of 23% or lower (computed as ROFR price divided by the Trust Points-equivalent value that Marriott can sell that week for).  The average ROFR-metric for these 13 weeks was 14%, but were as low as 1% and as high as 23%.  Three Gold, 10 Platinum.

That's interesting.  But what about the 18 weeks that did *not* get ROFR'd?  Any patterns?

7 of the 18 weeks were EOY.   Not a single EOY week was ROFR'd (even with low ROFR metrics, as low as 3%.)

1 of the 18 weeks was a Custom House, which is not yet present in the Trust (ROFR metric of 7%)

2 of the 18 weeks were Aruba weeks, which is not yet present in the Trust (one below 23%, and one above 23%)

1 of the 18 weeks was a Phuket week, which is not yet present in the Trust (No ROFR metric)  

1 of the 18 weeks is a Bronze week, which is likely not considered a prime week. (ROFR metric of 6%)

2 of the 18 weeks were Grande Vista Gold.  The Trust is deep in GV Gold (~1,000 GV Golds in there) -- but even so, these Annuals had low ROFR-metrics of 3%.

2 of the 18 weeks were Prime weeks, and premium priced at 28% and 32% ROFR-metric

1 of the 18 weeks was Doral, and I don't have the data to compute the ROFR metric

1 of the 18 weeks was a Newport Coast Platinum Plus, which was right on 23% ROFR metric.   But, there are 150 Week 26's already in the Trust.

There aren't any conclusions here because the dataset is so small, but this is what appears to have been ROFR'd:

1) Annual (high-quality) weeks 
2) ROFR-metric of 23% or lower
3) Weeks where the Trust isn't tremendously deep (hard to define)
4) U.S. weeks without RTU (not Aruba/Phuket/Custom House)

I just think this is very interesting.   We've all speculated that the period of cheapo Golds/Platinums may be coming to an end, and I'm starting to feel it.   I don't understand why they didn't ROFR EOYs, because there were some cheap EOYs that made it through, and there are clearly EOYs in the Trust.

Question for the group:  has anyone had an EOY purchase that failed ROFR recently?

Please do keep updating Dioxide's database, so we can try to figure out what Marriott is doing.  Thanks very much!

Best,

Greg


----------



## benyu2010 (Aug 12, 2013)

Dataset is indeed small and likely causes large margin of error. However, I think you are in the right direction.


----------



## sjsharkie (Aug 12, 2013)

GregT said:


> Interesting -- I'm still in limbo at the moment on my Trust Points transaction because the BK Trustee is slow, and Marriott hasn't provided the estoppel information yet so I can confirm the Trust Points are free and clear.   I'm very curious to proceed with this transaction, but continue to assess the landscape in case this package is not free and clear and I have to try again.
> 
> Best,
> 
> Greg



Greg--

Just curious here -- does the bankruptcy trustee state that the transaction needs to pass ROFR?  There is cloudy precedence that these ROFR clauses can be an unenforceable restriction on a contract as it tends to discourage other bidders from bidding -- therefore lowering the price of what could be obtained from the asset.  It is murky -- there is no clear precedence and it seems to be determined on a case by case basis.

Since you are going through a transaction, I thought I'd ask if the trustee has  disclosed the ROFR clause and intent to enforce it in their sale.

Thanks,
Ryan


----------



## jont (Aug 12, 2013)

GregT said:


> All,
> 
> I suspect we will be seeing more ROFRs in the coming days.  A few other observations -- again focusing on the last two months.  Note that this is a very small sample size (31 reported transactions), but interesting.
> 
> ...


Great work  Greg
you would make detective Colombo proud.


----------



## GregT (Aug 12, 2013)

sjsharkie said:


> Greg--
> 
> Just curious here -- does the bankruptcy trustee state that the transaction needs to pass ROFR?  There is cloudy precedence that these ROFR clauses can be an unenforceable restriction on a contract as it tends to discourage other bidders from bidding -- therefore lowering the price of what could be obtained from the asset.  It is murky -- there is no clear precedence and it seems to be determined on a case by case basis.
> 
> ...



Ryan,

Interesting question -- I know that my broker intends to submit for ROFR (at least that's what he told me).... I'll pose the question though...

Thanks to others for the comments -- and interesting that mjm, sb and Ben have also noticed the successful passage of EOY weeks....

Best,

Greg


----------



## billymach4 (Aug 12, 2013)

*BK?*

What is BK trustee?


----------



## hypnotiq (Aug 12, 2013)

BK == Bankruptcy


----------



## Fasttr (Aug 12, 2013)

billymach4 said:


> What is BK trustee?



Bankruptcy....he is purchasing resale points through a bankruptcy proceeding.


----------



## sjsharkie (Aug 12, 2013)

GregT said:


> Ryan,
> 
> Interesting question -- I know that my broker intends to submit for ROFR (at least that's what he told me).... I'll pose the question though...
> 
> ...



It would be up to the BK trustee -- the trustee determines how to dispose of the assets including whether or not to submit for ROFR.

Obviously, if the trustee is not requiring it, I would not submit for ROFR on your own -- I'm not sure whether or not the broker represents just you, or is representing both parties.

I'm not an attorney, but I've been through this for something else.  Contact me if you want more details.

-ryan


----------



## BocaBoy (Aug 12, 2013)

I recently inquired of Marriott Resales whether they would be interested in buying back an EOY week.  They said no, that they will only give buyback offers on annual weeks.  I would imagine that same logic is being employed in making their ROFR decisions.


----------



## benyu2010 (Aug 13, 2013)

IMHO, EOY should be worth much less than the half price of equivalent annual week. ROFR and buyback are strong support of price which EOY weeks lack of. Also, closing cost and transfer/waiver is the same for EOY, annual or even two in one deed. One gets four times of usage for same transaction cost from two in one deed than EOY. EOY w/ non-usage year next is a hard-sell.

EOY is basically a mutated form of deed week that lacks liquidity and buyers


----------



## PassionForTravel (Aug 13, 2013)

Ben,

Have to disagree with you on the EOY, Marriott might not be interested in them, but there sure are a lot of others who are, me for one and all the other people who were bidding against me. The reason is simple if I have limited time off and want to play with a bunch of systems, or have home resort advantage in more than one location then EOY works great. Yes there are two closing costs and transfer fees but that's minimal compared to MF over the years, which in most systems are 1/2 of annual.

For Marriott it probably complicates their system to have a unit available one year and not the next and its probably not very efficient use of there time. They get twice the bang for a ROFL with an annual.

When I was actively bidding on new contracts earlier this year EOY was going for 40-60% of annual. Yes Marriott may not be ROFR them but if people can't get an annual because Marriott is ROFR them, then the next place they will look is to the EOY. So the effect is the same a restriction of supply. I do agree that a unit without current year or next year usage is much less desirable.

Ian


----------



## benyu2010 (Aug 13, 2013)

Ian,

I missed the last line I wrote before. The difference of price is likely marginal. Lol

We looks at EOY from slight different perspectives. I'm more focus on marketability and you are more owner orientated. However, I need to emphasize the exit mechanism is very important in timeshare, and lack of an 'official' and guaranteed exit is a pretty serious downside.

Best,

Ben


----------



## m61376 (Aug 13, 2013)

benyu2010 said:


> IMHO, EOY should be worth much less than the half price of equivalent annual week. ROFR and buyback are strong support of price which EOY weeks lack of. Also, closing cost and transfer/waiver is the same for EOY, annual or even two in one deed. One gets four times of usage for same transaction cost from two in one deed than EOY. EOY w/ non-usage year next is a hard-sell.
> 
> EOY is basically a mutated form of deed week that lacks liquidity and buyers



At their hey day, Marriott sold EOY weeks, unless 2 were bought within a year of each other, at 60%. As posted above, it is a great way to minimize MF's ESP. If the objective is to visit every other year. Despite the higher closing costs when amortized, the MF's, which add up, more than compensate. Great especially for units that have high MF's and would otherwise be traded frequently, or for those with limited funds and/ or vacation time. It's also a good entryway into timeshares, to test the waters so to speak and see if it fits your lifestyle.


----------



## BJRSanDiego (Oct 23, 2013)

*This might be the first EOY fail*

In Sept I entered into a sales agreement to buy a resale EOY Marriott DSV2. Price was probably recent market price and not a steal.  But,  It failed.  So, either Marriott screwed up thinking that it was an annual or they had a buyer to make a quick sale or they are starting to exercise on EOY units too.


----------



## dioxide45 (Oct 23, 2013)

BJRSanDiego said:


> In Sept I entered into a sales agreement to buy a resale EOY Marriott DSV2. Price was probably recent market price and not a steal.  But,  It failed.  So, either Marriott screwed up thinking that it was an annual or they had a buyer to make a quick sale or they are starting to exercise on EOY units too.



There is one other one in the database. Though it was a $10.50 Legends Edge. 1965 also reported an exercise on a EOY, but I think they came back and said it wasn't.


----------



## thinze3 (Oct 24, 2013)

BocaBoy said:


> I recently inquired of Marriott Resales whether they would be interested in buying back an EOY week.  They said no, that they will only give buyback offers on annual weeks.  I would imagine that same logic is being employed in making their ROFR decisions.



Not a buyback offer, but Marriott sent me another resale offer today for my EOY Waiohai.  This is the second time in a year they have done this.  If a ROFR opportunity came along today for a similar EOY unit, they would probably snatch it up.


----------



## GregT (Jan 11, 2014)

GregT said:


> There aren't any conclusions here because the dataset is so small, but this is what appears to have been ROFR'd:
> 
> 1) Annual (high-quality) weeks
> 2) ROFR-metric of 23% or lower
> ...



*January 2014 Update:*

Earlier in this thread has data from previous periods -- I was curious to see what had happened in the second half of 2013.  There is a little overlap with my earlier results, which were through August 10, 2013.

But....there were 48 ROFR transactions reported in Dioxide's database from July 1, 2013 through December 31, 2013.

Of those 48 reports, there were 30 that passed and 18 that failed.

Units that passed ROFR (30 units):

17 of the 30 weeks are Platinum weeks (11 Annual, 6 EOY).
1 of the 17 Platinum Weeks is a Custom House, which is not in the Trust
2 of the 17 Platinum Weeks are Aruba Surf, which is not in the Trust
1 of the 17 Platinum Weeks is a Phuket week, which is not in the Trust

So...13 weeks are most interesting to me -the 2BR Platinums that are eligible for putting into the Trust - 6 are EOY, and 7 are Annuals.

Of the 7 Annuals, 6 had a ROFR metric of 22% or higher.  There is one Passed week (Beachplace Towers, for $3,050) that defies the trend.

Units that failed ROFR (18 units)

15 of the 18 weeks are Platinum weeks (14 Annual, 1 EOY)
14 of the 15 weeks had a ROFR metric less than 22% (average is 12%)

The one week with a ROFR metric > 22% is a 3BR Grande Vista, with a ROFR metric of 23%.

Although still a small data set, it affirms the trends noted previously.   A major difference is that an EOY has been ROFR'd, which I had not seen before.

For the moment, a ROFR metric of 23% appears to be the price point below which a 2BR Platinum appears to be at risk of not passing ROFR.  And ROFR metrics below 15% are almost certain to be ROFR'd.

ROFR metric computed as:  Purchase Price divided by (Legacy Points value times $10)

Interesting stuff.

Best,

Greg


----------



## dioxide45 (Jan 11, 2014)

Thanks for the continued analysis. Definitely interesting to see what levels ROFR seems to be trending at. Even though we have seen some ROFR activity on EOY weeks, it still doesn't seem to be their most desirable weeks to exercise on.


----------



## kds4 (Jan 13, 2014)

GregT said:


> *January 2014 Update:*
> 
> Earlier in this thread has data from previous periods -- I was curious to see what had happened in the second half of 2013.  There is a little overlap with my earlier results, which were through August 10, 2013.
> 
> ...



This is interesting. Where can you find out the points conversion value of legacy weeks?


----------



## Fasttr (Jan 13, 2014)

kds4 said:


> This is interesting. Where can you find out the points conversion value of legacy weeks?



I believe that info can be found via the tripod link at the bottom of GregT's posts.


----------



## dioxide45 (Jan 13, 2014)

kds4 said:


> This is interesting. Where can you find out the points conversion value of legacy weeks?





Fasttr said:


> I believe that info can be found via the tripod link at the bottom of GregT's posts.



The thing is, there are really three sets of numbers.

1) There is the one number that Marriott assigns for conversion of legacy weeks to points. When you convert your week to points, it is the number of DC points Marriott gives you. This is what is available at the link on the Tripod site. There is also a link on VPE.

2) Then there is a number that Marriott uses when conveying weeks to the trust. This number isn't exactly the same as the amount that they give for election of weeks to points.

3) There is also an average points allocated that Dan put together, I don't have a link to that. It was the average of all weeks in a season that DanCali put together.

Either way, the numbers in 1 and 2 are not that far apart and 3 is just an average of number 1. So no matter what number is used, the ROFR Metric that Greg came up with wouldn't be statistically different.


----------



## GregT (Jan 13, 2014)

Dioxide,

I like the new Avatar.  Is the pyramid erupting?

Best,

Greg


----------



## dioxide45 (Jan 13, 2014)

GregT said:


> Dioxide,
> 
> I like the new Avatar.  Is the pyramid erupting?
> 
> ...



Thanks. It kind of looks like it, doesn't it. Never noticed that before. It is Chichen Itza. We went there back in 2011 when we went to Cancun. Returning again this year in May. What looks to be an eruption is just the tree in the foreground.

The part we like about the photo is that surprisingly, there are no people in front of it. Getting a photo of El Castillo without a human standing in the way is not an easy feat. The crowds, and heat, make it difficult. There is always someone in the way, and because of the heat you don't want to wait around long for people to move. If someone does move, there is certainly someone else ready to get in the way without even knowing it.


----------



## GregT (Jan 14, 2014)

dioxide45 said:


> Thanks. It kind of looks like it, doesn't it. Never noticed that before. It is Chichen Itza. We went there back in 2011 when we went to Cancun. Returning again this year in May. What looks to be an eruption is just the tree in the foreground.
> 
> The part we like about the photo is that surprisingly, there are no people in front of it. Getting a photo of El Castillo without a human standing in the way is not an easy feat. The crowds, and heat, make it difficult. There is always someone in the way, and because of the heat you don't want to wait around long for people to move. If someone does move, there is certainly someone else ready to get in the way without even knowing it.



That is a great picture -- I'd not focused on the lack of people, very interesting picture indeed.   We went to Chaccoben, near Costa Maya last year and it was very impressive too.

Best,

Greg


----------



## dioxide45 (Jan 14, 2014)

GregT said:


> That is a great picture -- I'd not focused on the lack of people, very interesting picture indeed.   We went to Chaccoben, near Costa Maya last year and it was very impressive too.
> 
> Best,
> 
> Greg



We went to Chacchoben while on a cruise several years ago, I believe also in Costa Maya. It was the first of Mayan Ruins that we visited. Out in the middle of the jungle, very hot and lots of mosquitoes. We were lucky and remembered our bug spray. Everyone else was swatting away mosquitoes all day while they didn't bother us at all.


----------



## DCBoy (Jan 14, 2014)

Just curious. Why wouldn't Marriott be interested in buying back or exercising its ROFR on a week at a RTU property?


----------



## Fasttr (Jan 14, 2014)

DCBoy said:


> Just curious. Why wouldn't Marriott be interested in buying back or exercising its ROFR on a week at a RTU property?



I assume its because MVC doesn't have a nice clear home for it.  Since they are no longer selling weeks, and the RTU's can't reside in the Trust, they would have to have an additional permanent home for such weeks, so such weeks could still be part of the MVC Exchange.  That said, I don't think they have an appitite for owning such inventory at this point in time.


----------



## m61376 (Jan 14, 2014)

DCBoy said:


> Just curious. Why wouldn't Marriott be interested in buying back or exercising its ROFR on a week at a RTU property?



I think it's because they can only sell it as a Marriott resale week, and they aren't really in the week market anymore. Since they can't be put into the trust, they can't be sold as points.

Buying weeks to be placed in the exchange doesn't make financial sense. They're only going to outlay money for weeks that they can get a substantial return on their investment for.


----------



## kjd (Jan 16, 2014)

Just got notified that Marriott resales is interested in selling my plat EOY.  It had been on a wait list to be sold.  Is this a sign that Marriott has buyers for EOYs?  If there is a demand for EOYs will there be more ROFRs than in the past?  

I believe that the market for EOYs will be stronger as maintenance fees increase year after year.  With an EOY lockoff you can trade into a unit every year for only one half of the maintenance fees.  Particularly if you trade the studio during flextime.  This is appealing to some buyers who balk at the high cost of timeshare ownership.


----------



## Saintsfanfl (Jan 16, 2014)

kjd said:


> Just got notified that Marriott resales is interested in selling my plat EOY.  It had been on a wait list to be sold.  Is this a sign that Marriott has buyers for EOYs?  If there is a demand for EOYs will there be more ROFRs than in the past?
> 
> I believe that the market for EOYs will be stronger as maintenance fees increase year after year.  With an EOY lockoff you can trade into a unit every year for only one half of the maintenance fees.  Particularly if you trade the studio during flextime.  This is appealing to some buyers who balk at the high cost of timeshare ownership.



There are two types of deals. One is Marriott makes a direct purchase, or ROFR, and adds the week into the trust. The other is Marriott acts as the broker for a resale purchase. Marriott does not buy or ROFR any weeks that they then turn around and resell. If Marriott is interested in brokering your EOY week it is because the demand is there. There are plenty of EOY's listed for sale by the resale department.

Marriott previously was not buying back or ROFR'ing EOY's but that has changed. They have been taking EOY's for the trust.


----------



## SMB1 (Feb 13, 2014)

GregT said:


> All,
> 
> I've heard from different brokers that Marriott has significantly increased its ROFR activity.   Dioxide's database has 31 entries since June 1, 2013, and 13 of them are failed transactions.  2013 in general has a much higher ROFR pace than previous years (which is not unexpected) but I thought almost 50% failed transactions was higher than I expected.
> 
> ...



Greg,
Perhaps I missed it in another thread, but what is the status on your purchase of resale points?  I'm very interested in the outcome.  Thanks for being our guinea pig.


----------



## LilMsFoodie (Feb 13, 2014)

I had two EOY Grande Vista gold weeks that have sold through Marriott's resale department in two weeks.  The second one is for 2016 as I had already elected points and then sold them when we decided we no longer wanted to spend time in timeshares.  Last year we had time in Crystal shores and Oceana Palms, both ocean front, but really would prefer a real resort setting in the future.   I took Marriott up on their offer to list them not wanting the hassle of selling myself.  I am shocked the 2016 use week sold almost as fast as the 2015 one.   

Thanks to everyone on this site, particularly you Greg and Dioxide and Sue.  Now I just have to use up the rewards points and I will finished with Marriott.    

Greg, I will give a plug for your points exchange.  I used it to both buy points and sell them, the last sale occurring in January 2014.   Points were sold in a day and covered the annual fee and exchange fee...the most anyone could really hope for.  Thanks  Greg.


----------



## Saintsfanfl (Feb 13, 2014)

The resale department has been very active in selling weeks. I have two in process right now that are selling at list around $26k total that I only paid $4,500 for a year ago. I did not really want to sell them but I couldn't pass up on taking the almost 250% ROI profit. 

Weeks directly through Marriott are still a great buy for some people compared to buying points. The points needed to book the weeks for that $26K purchase would cost more than $100K and almost double the maintenance fees.


----------



## GregT (Feb 13, 2014)

SMB1 said:


> Greg,
> Perhaps I missed it in another thread, but what is the status on your purchase of resale points?  I'm very interested in the outcome.  Thanks for being our guinea pig.



Happy to help -- please see this link.

LilMs, thank you for the comments, I am so happy that the site was useful!

Best,

Greg


----------



## SMB1 (Feb 13, 2014)

GregT said:


> Happy to help -- please see this link.
> 
> LilMs, thank you for the comments, I am so happy that the site was useful!
> 
> ...



Very interesting.  Thank you.


----------

