In our annual MF invoices, Starwood sent some information which disclosed some affiliations that I found interesting. I also have no idea how to interpret the second the last paragraph, so if anyone has any ideas, I'd love to hear it:
Paragraph 1 indicates that the Association has "an inventory purchase agreement with the Developer through December 18,2015 with automatic renewal..." where the Association agrees to "sell, transfer and convey to the Developer, a certain number of unit-weeks. The purchase price of each acquired week shall be the acquisitions costs for the selected unit-week. the purchase price...shall be the costs, if any, of preparing and filing the line. the Developer shall not be liable for payment of any assessments on any acquired unit-week..."
"During the years ended December 31, 2014 and 2013, the Association recognized $684,038 and $449,066 respectively, for the sale of Association owned inventory to the Developer."
I read this to say that x number of delinquent accounts that were foreclosed on were basically handed over to the developer without an attempt to recoup the back assessments. Old news which once again illustrates the sweetheart deal they wrote for themselves. Anyway, I don't know whether the amounts "recognized" were the amount of back MFs forgiven, or the amount Starwood paid to acquire the foreclosures. Seems high to be the latter.
Paragraph 2: "As of December 31, 2014 and 2013, the Developer owned 1,496.5 and 1,161 unit-weeks respectively."
I think that there's around 515 villas in the Bella phase, though I cannot find confirmation of that anywhere. If that's true, then they own ~6% of the resort.
Paragraph 3: "SVO Management, Inc. (the "Manager")...is an affiliate of the Developer. Substantially all operating expenses have been allocated to the Association from the Manager..."
Paragraph 4: "The Association leases telephone equipment and related services from VCH Communications, Inc...a Florida corporation and an affiliate of the Manager...For each year of the renewal term, the annual rent shall be no more than 110% of the prior year's rent. Telephone equipment expense under this lease was $237,002...for the year...ended December 31,2014."
Confirms what I've suspected, which is that Starwood awards sub-contracts to itself via affiliated companies. If I'm reading the numbers correctly, then it appears that we're paying about $166 per unit per month for telephone equipment rental. Wow.
Paragraph 5: "The association also leases cable television and related services from VCH...The basic monthly rental is subject to an annual increase of five percent of the preceeding year's monthly basic rental. Cable television expense under this lease for the year...ended December 31, 2014 was $84,334."
Only $2.48-6.93 per owner for cable? Max $30 per month? Now that seems really low! I'd expect it to be other way around.
Paragraph 6: "The Association has an affiliation with Starwood Vacation Exchange Company ("SVN Operator") in its capacity as operator of the Starwood Vacation Network. SVN Operator has established a mandatory exchange program known as the Starwood Vacation Network to provide a means for its members to reserve the use of units in resorts affiliated with SVN from time to time. Unless sooner terminated as provided in the agreement, the agreement shall expire on the expiration of the term of the vacation ownership plan at the resort. As of December 31, 2014 and 2013, the amount due from SVN Operator for overpayment of club dues received by the Association from SVN members was $2035 and $1,171, respectively, and is netted against accrued expenses."
English is my first language, and I have no idea what this all means. Anyone?
Paragraph 7: "In addition, the affiliation agreement noted above calls for the SVN Operator to allocate the total net rental proceeds, if any, 50% each to the SVN Operator and the Association until the Association receives an amount of rental proceeds equal to 2.5% of the Association's annual budget for each fiscal year. For the years ended December 31, 2014 and 2013, the total proceeds allocated to the Association were $430,229 and $418,046, respectively. There was no amount due to the Association from the SVN Operator."
I'm glad to see the Association enjoying some nice revenue for rentals. However, I have no idea what percentage we received of the total rental dollars, which IMO is an important number.
Paragraph 1 indicates that the Association has "an inventory purchase agreement with the Developer through December 18,2015 with automatic renewal..." where the Association agrees to "sell, transfer and convey to the Developer, a certain number of unit-weeks. The purchase price of each acquired week shall be the acquisitions costs for the selected unit-week. the purchase price...shall be the costs, if any, of preparing and filing the line. the Developer shall not be liable for payment of any assessments on any acquired unit-week..."
"During the years ended December 31, 2014 and 2013, the Association recognized $684,038 and $449,066 respectively, for the sale of Association owned inventory to the Developer."
I read this to say that x number of delinquent accounts that were foreclosed on were basically handed over to the developer without an attempt to recoup the back assessments. Old news which once again illustrates the sweetheart deal they wrote for themselves. Anyway, I don't know whether the amounts "recognized" were the amount of back MFs forgiven, or the amount Starwood paid to acquire the foreclosures. Seems high to be the latter.
Paragraph 2: "As of December 31, 2014 and 2013, the Developer owned 1,496.5 and 1,161 unit-weeks respectively."
I think that there's around 515 villas in the Bella phase, though I cannot find confirmation of that anywhere. If that's true, then they own ~6% of the resort.
Paragraph 3: "SVO Management, Inc. (the "Manager")...is an affiliate of the Developer. Substantially all operating expenses have been allocated to the Association from the Manager..."
Paragraph 4: "The Association leases telephone equipment and related services from VCH Communications, Inc...a Florida corporation and an affiliate of the Manager...For each year of the renewal term, the annual rent shall be no more than 110% of the prior year's rent. Telephone equipment expense under this lease was $237,002...for the year...ended December 31,2014."
Confirms what I've suspected, which is that Starwood awards sub-contracts to itself via affiliated companies. If I'm reading the numbers correctly, then it appears that we're paying about $166 per unit per month for telephone equipment rental. Wow.
Paragraph 5: "The association also leases cable television and related services from VCH...The basic monthly rental is subject to an annual increase of five percent of the preceeding year's monthly basic rental. Cable television expense under this lease for the year...ended December 31, 2014 was $84,334."
Only $2.48-6.93 per owner for cable? Max $30 per month? Now that seems really low! I'd expect it to be other way around.
Paragraph 6: "The Association has an affiliation with Starwood Vacation Exchange Company ("SVN Operator") in its capacity as operator of the Starwood Vacation Network. SVN Operator has established a mandatory exchange program known as the Starwood Vacation Network to provide a means for its members to reserve the use of units in resorts affiliated with SVN from time to time. Unless sooner terminated as provided in the agreement, the agreement shall expire on the expiration of the term of the vacation ownership plan at the resort. As of December 31, 2014 and 2013, the amount due from SVN Operator for overpayment of club dues received by the Association from SVN members was $2035 and $1,171, respectively, and is netted against accrued expenses."
English is my first language, and I have no idea what this all means. Anyone?
Paragraph 7: "In addition, the affiliation agreement noted above calls for the SVN Operator to allocate the total net rental proceeds, if any, 50% each to the SVN Operator and the Association until the Association receives an amount of rental proceeds equal to 2.5% of the Association's annual budget for each fiscal year. For the years ended December 31, 2014 and 2013, the total proceeds allocated to the Association were $430,229 and $418,046, respectively. There was no amount due to the Association from the SVN Operator."
I'm glad to see the Association enjoying some nice revenue for rentals. However, I have no idea what percentage we received of the total rental dollars, which IMO is an important number.
SVV Bella letter to owners
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