Attached files
| file | filename |
|---|---|
| 8-K - BLUEGREEN VACATIONS CORP | i00035_bxg-8k.htm |
Statements in this presentation may constitute forward looking statements and are made pursuant to the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Forward looking statements are based largely on expectations and are subject to a number of risks and uncertainties including but not limited to the risks and uncertainties associated with economic, credit market, competitive and other factors affecting the Company and its operations, markets, products and services, as well as the risk that the Company may not be able to refinance or restructure outstanding debt; the Company’s strategic initiatives are not maintained successfully, do not have the expected impact on the Company’s financial position, results or operations, liquidity, and credit prospects; the performance of the Company’s vacation ownership notes receivable may continue to deteriorate in the future; the Company may not be in a position to draw down on its existing credit lines or may be unable to renew, extend or replace such lines of credit; the Company may require new credit lines to provide liquidity for its operations, including facilities to sell or finance its notes receivable; real estate inventories, notes receivable, retained interests in notes receivable sold or other assets will be determined to be impaired in the future; risks relating to pending or future litigation, claims and assessments; sales and marketing strategies related to Resorts and Communities properties may not be successful; retail prices and homesite yields for Communities properties may be below the Company’s estimates; marketing costs will increase and not result in increased sales; sales to existing owners will not continue at current levels; fee-for-service initiatives may not be successful; deferred sales may not be recognized to the extent or at the time anticipated; and the risks and other factors detailed in the Company’s SEC filings, including its most recent Annual Report on Form 10-K filed on March 16, 2009, Form 10K/A filed on April 30, 2009, and Form 10-Q filed on November 9, 2009.
Safe Harbor
Company Profile
Top-4(1)publicly-held timeshare company with desirable vertical integration.
Flexible Vacation Club product with broad national footprint, which diversifies
risk.
Communities business focused on retail sales of residential homesites in select
markets.
Strong emphasis on customer experience.
Attractive demographic profile.
Increasing focus on growing base of recurring, Fee-Based Service revenues.
Experienced management team, focused on navigating current market
conditions.
2008 – Implemented dramatic restructuring to preserve liquidity, reduce
overhead and best position the Company for the long term.
(1) Based on VOI Sales
Bluegreen Resorts
RESORTS
Bluegreen Corporation
Vacation Ownership Interests sold through real-
estate based Bluegreen Vacation Club®
215,400 owners (166,700 in Bluegreen Vacation
Club) at 9/30/09
51 in-network resorts, near “drive to” vacation
destinations and Aruba
Access to 18 Shell Vacations Club Resorts
through “Select Connections” partnership
Unique Club Configuration
Bluegreen Vacation Club- ‘Trust’ architecture allows for the
retention of voting rights once inventory is sold, perpetual
management control, and allows for non-judicial foreclosures for
non performing consumer mortgages or assessment fee
obligations.
Members’ ownership is conveyed through a deeded
real estate interest in a specific resort unit
and week which is held in a bankruptcy-remote
trust on the members’ behalf
Members’ ownership is in perpetuity and can be sold,
bequeathed or otherwise conveyed to third parties
Members’ beneficial usage rights consist of an annual or biennial
allotment of vacation points that can be used for varying length
of stays at any of 51 in-network resorts or can be indirectly
exchanged for stays at over 3,700 resorts in over 100 countries
through Resort Condominiums International, LLC (RCI), the
largest vacation ownership exchange company
Advantages of Vacation Club
Distribution Channel – Not limited to typical constraints of selling real estate at a
single site location. Instead, through the Club any approved inventory can be
sold at most of our sales offices.
Long-term relationship with customer – Our agreement to manage the Club
enables us to ensure a consistent service experience for our owners in addition
to providing us with a recurring management fee.
Long-term relationship with resorts – The property management agreements we
have with homeowners’ associations in Club resorts allows us to ensure that
owners receive consistent high quality vacation experiences at all of our resorts.
Similar to the vacation club management agreement, our property management
agreements also provide us with a recurring source of cash-based income.
Bluegreen Vacation Club Attributes
The typical sales objections regarding inventory mix are reduced by allowing the
sales team to focus on the Club structure and the network of resort opportunities
and not just a single site location.
Based on consumers being geographically diverse, regional credit risk in the
Bluegreen mortgage portfolio is mitigated.
Sales team quality and career paths are enhanced due to continuance of sales
beyond typical sellout.
Hotel Room vs. Timeshare Vacation Home
Typical Hotel Room
Typical Bluegreen Resort Villa
1 Bedroom
1 Bathroom
400 Sq. Ft.
2 Bedrooms
2 Bathrooms
Living Area
Full Kitchen
Washer/Dryer
1,100+ Sq. Ft.
Bluegreen Resorts
Mountain Run at Boyne, Boyne Falls Michigan
Club 36, Las Vegas, Nevada
Grande Villas at World Golf Village, St. Augustine, Florida
The Fountains, Orlando, Florida
0
50,000
100,000
150,000
200,000
250,000
12/31/2005
12/31/2004
12/31/2003
12/31/2002
12/31/2006
185,000
171,000
12/31/2007
153,000
134,000
115,000
88,000
BluegreenCorporation
RESORTS
Growing Number of Resort Owners
12/31/2008
208,000
215,400
9/30/2009
Additional Sales to Existing Owner Base
0
5
10
15
20
25
30
35
40
45
50
55
2004
2005
2006
2007
2008
YTD Q3 2009
24%
28%
34%
41%
46%
55%
BluegreenCorporation
RESORTS
Timeshare Industry: Impact of Liquidity Crisis
Despite robust sales, most timeshare companies have taken measures to
downsize. Bluegreen was proactively the first amongst the larger entities in the
space to make such changes.
Lack of securitization activity, not lack of consumer demand, has been the
primary driver of Bluegreen’s actions.
Industry-wide impact, including:
Wyndham
Starwood
Marriott
Bluegreen
Goals of Bluegreen’s 2008/2009 Strategic Initiatives
Significantly reduced our timeshare sales operations in an attempt to reduce our
sales pace to our known receivable financing capacity and projected cash sales;
Emphasizing cash-based businesses in our sales, resort management and
finance operations;
Minimizing the cash requirements of Bluegreen Communities;
Reducing overhead and increasing efficiencies;
Minimizing capital spending;
Continuing to provide a high level of quality vacation experiences and customer
service to our VOI owners; and
Generating cash and income.
Sales Mix By Payment Type
2008
2009*
Cash at Close (1)
13%
24%
30-Day Cash-outs (2)
13%
23%
Sales realized in cash in 30 days (1)
24%
41%
% of Sales consisting of mortgage loan
76%
59%
(1)
Includes both 100% cash sales and down payments.
(2)
30-Day Cash-Outs are computed as % of loan balance, not as a % of sales.
* Preliminary
Fee-Based Services
A customized suite of timeshare services and product offerings for third-party property
owners/developers.
Services are based on Bluegreen’s core competencies in:
Sales & Marketing
Property Management
Risk management
Title & Escrow
Design & Development
Mortgage Servicing
Allows third-party property owners/developers to lever off of the benefits of the
Bluegreen Vacation Club product and sales distribution platform.
Cash business, which requires little if any capital expenditure by Bluegreen.
Expands the offerings of the Bluegreen Vacation Club.
Fee-Based Services
Contract
Service
A
B
C
D
E
Sales & Marketing
X
X
X
X
X
Property Mgmt Services/ Risk Mgmt
X
X
X
X
X
Title & Escrow
X
X
X
X
X
Design & Development
X
X
Mortgage Servicing
X
Selling and Marketing Expenses
59
55
56
57
47
247
261
275
220
86
0
25
50
75
100
125
150
175
200
225
250
275
2006
2007
2008
YTD 9/08
YTD 9/09
% of Gross Sales
$ in Millions
Headcount
As of 9/30/08
As of 1/31/09
As of 1/21/10
Resorts
(Excluding Management)
4,187
1,348
1,973
Resorts Management
1,467
1,388
1,338
Communities
342
211
91
Corporate Support
310
202
207
Total
6,306
3,159
3,609
Reduce Capital Expenditures
(in millions)
2008 Actual
2009 Preliminary
Reduction %
Inventory
Spending:
Resorts
$ 119
$ 25
(79)%
Communities
40
6
(85)%
PP&E and
Other Cap Ex
31
2
(94)%
Total:
$ 190
$ 33
(83)%
Results of 2008/2009
Strategic Initiatives YTD 9/30/09
Increased operating/investing cash flow by over $204 million (9 months ended
9/30/09 vs. 9 months ended 9/30/08).
Repaid over $32 million under lines-of-credit and notes payable.
Generated Resorts Field Operating Profit of $31.5 million (19% of sales; YTD 2009)
vs. $31.9 million (10% of sales, YTD 2008), despite over 50% decrease in sales.
Generated positive cash flow from Bluegreen Communities.
Successfully launched “capital-light” fee-based service business model.
Successfully extended over $200 million in debt obligations.
* GAAP Basis.
$0
$100
$200
$300
$400
$500
$600
2006
2007
2008
YTD Q3 ‘08
YTD Q3 ‘09
$420
$476
$496
$385
$184
(a) Excludes estimated uncollectable VOI notes receivable and gain on sales of notes receivable.
BluegreenCorporation
RESORTS
Gross VOI Sales (a)
($ in millions)
Resorts Segment Operating Profit(1)
RESORTS
BluegreenCorporation
$0
$10
$20
$30
$40
$50
$60
2006
2007
2008
YTD Q3 ‘08
YTD Q3 ‘09
$10
$24
$39
$24
$32
(2)
(2)
(2)
(2)
(2)
($ in millions)
(1)
Operating profit prior to the allocation of corporate overhead, interest income, other income (expense), interest expense, income taxes, minority interest, and cumulative effect of change in accounting
principle. Pro forma adjustments by year as noted below.
(2)
Reflects impact of SFAS No. 152, however includes pro forma adjustments to exclude gain on sale of notes receivable of $44.7 million, $39.4 million, $8.2 million, $8.2 million and $0 in 2006, 2007, 2008,
YTD Q3 ‘08 and YTD Q3 ‘09 respectively.
Bluegreen Communities
Direct-to-consumer sales of residential
homesites
Deed restricted communities
“Exurbia” in southeastern and
southwestern United States
Certain properties include golf courses
designed by PGA champions
Primarily a cash business
Pre-sales possible through combination
of bonding to completion and corporate
guaranty
COMMUNITIES
BluegreenCorporation
Bluegreen Communities Strategic Initiatives
Consolidated field operations, thereby eliminating sales, construction and/or administrative
activities at 12 locations.
Eliminated those advertising programs which we believe have become less effective, and focus
primarily on internet marketing campaigns.
Eliminated over 70% of our sales, marketing, development and administrative associates.
As we have completed development of phases of our communities, development expenditures
in 2009 were materially below expenditures in 2008.
Pursue opportunities to use our core competencies to provide services to third-parties on a fee
basis in the areas of:
asset management
market research
other real estate consulting services
Goal : Strive to operate Bluegreen Communities at a cash break-even or better until market
conditions provide other opportunities.
$192
$192
$164
$129
$47
$45
$13
0
20
40
60
80
100
120
140
160
180
200
220
2004
2005
2006
2007
2008
YTD Q3
‘08
YTD Q3
‘09
Bluegreen Communities Sales
COMMUNITIES
BluegreenCorporation
($ in millions)
$0
$10
$20
$30
$40
$50
$60
2004
2005
2006
2007
2008
YTD Q3’08
YTD Q3 ’09
$38
$36
$24
$(4)
$4
$(6)
$47
(2)
($ in millions)
BluegreenCorporation
COMMUNITIES
(1)
Operating profit prior to the allocation of corporate overhead, interest income, other income (expense), interest expense, income taxes, and minority interest.
(2)
Includes $5.2 million of pre-tax inventory impairment charges in 2008.
Bluegreen Communities Segment Operating Profit (Loss)(1)
Bluegreen Corporation Earnings Per Share
(Pro forma as noted)
(a)
Reflects impact of SFAS No. 152
(b)
Pro forma to exclude $ 0.89 per share gain on sale of notes receivable. GAAP EPS was $0.96.
(c)
Pro forma to exclude $0.78 per share gain on sale of notes receivable. GAAP EPS was $1.02.
(d)
Pro Forma to exclude $0.59 per share in primarily non-cash changes for restructuring, goodwill impairment and communities inventory impairment, as well as $ 0.16 gain on sale of receivables. GAAP EPS was $(0.02).
(e)
Pro Forma to excludes $0.16 per share gain on sale of receivables. GAAP EPS was $0.37
$0.00
$0.20
$0.40
$0.60
$0.80
2006
2007
2008
YTD Q3’08
YTD Q3’09
$0.07
$0.24
$0.41
$0.21
$0.46
(a) (b)
(a) (c)
(a) (d)
(a) (e)
(a)
BLUEGREEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
$ (220)
$ (54,734)
Net decrease in cash and cash equivalents
(32,338)
117,283
Net cash provided by financing activities
(4,936)
(2,724)
Payment of debt issuance costs
—
132
Proceeds from exercise of stock options
—
(55,000)
Payments on 10.50% senior secured notes
(32,722)
(72,943)
Payments under lines-of-credit facilities and other notes payable
11,818
104,278
payable
Proceeds from borrowings under lines-of-credit facilities and other notes
(67,995)
(76,387)
Payments on borrowings collateralized by notes receivable
61,497
219,927
Proceeds from borrowings collateralized by notes receivable
Financing activities:
25,534
8,357
Net cash provided by investing activities
32,361
34,414
Cash received from retained interests in notes receivable sold
—
(6,105)
Cash used in business acquisitions
13
8
Proceeds from the sale of property and equipment
(6,840)
(19,960)
Purchases of property and equipment
Investing activities:
$ 6,584
$ (180,374)
Net cash (used) provided in operating activities
2009
2008
September 30,
Nine Months Ended
Credit Facilities
($ in thousands)
Lender
Type
Revolving
Advance Period
Expiration
Maturity
Facility
Amount
Amount
Outstanding
Amount
Available
Resorts Division
BB&T
Receivables Purchase Facility
6/29/2010
6/5/2022
$150,000
$131,302
$18,698
(A)(B)
Liberty
Receivable Hypothecation
Facility
8/27/2010
8/27/2014
75,000
59,676
15,324
(A)
Wells Fargo
Capital Finance
Receivable Hypothecation
Facility
12/31/2009
12/31/2010
30,000
14,409
15,591
(A)(C)
$49,613
A.
Facility amount is revolving, so additional availability is generated as the principal balance amortizes, subject to eligible collateral and/or other
terms and conditions.
B.
On-balance sheet, non-recourse (except for representations and warranties).
C.
In discussion regarding up to one year extension on a revolving basis.
As of December 31, 2009
Contractual Debt Maturities
As of December 31, 2009
Debt
Balance
($ in millions)
12/31/09
2010
2011
2012
2013
2014
2015 beyond
Receivable Backed Notes (1)
$ 243.4
$ -
$ -
$ 14.4
$ -
$ 59.7
$ 169.4
Lines of Credit & Notes Payable (1)
185.8
48.0
60.4
59.9
14.4
0.5
2.5
Jr Subordinated Debentures
110.8
-
-
-
-
-
110.8
Subtotal
$ 540.1
$ 48.0
$ 60.4
$ 74.4
$ 14.4
$ 60.1
$ 282.7
Pre-Extension Maturities
540.1
87.5
51.8
50.8
4.1
60.4
285.4
Increase / (Reduction)
$ (39.4)
$ 8.5
$ 23.5
$ 10.3
$ (0.2)
$ (2.6)
1)
Assumes that $40.2 million of Wachovia debt and $14.4 million of Wells Fargo debt are extended pursuant to current
discussions, and that Wachovia further extends remaining $20.7 million again for two years in 2012. There can be no
assurances, that such extensions will occur on favorable terms or at all.
In-house servicing of all receivables;
servicing is centralized at our Boca
Raton, FL headquarters.
Loans Serviced on LSAMS
(Loan Servicing and
Accounting Management
System).
Bluegreen has been servicing
loans for over 20 years. Our
Mortgage management team has
a combined 120 years of
servicing experience, with an
average tenure of 13 years
with Bluegreen.
Notes Receivable Outstanding
(Resorts and Communities)
(in millions)
$171
$218
$250
$300
$371
$460
$569
$699
$823
$932
$833
$0
$250
$500
$750
$1,000
Receivables Financing Program
Bluegreen Resorts
Credit Underwriting Standards
1994 – 2008: 10% Down Payment; No other credit verification
Effective December 15, 2008: Implemented FICO® Score-Based Standards
to determine if credit will be offered and if so on what terms:
* No reduction of interest rate
FICO ®
Minimum Cash %
X > = 600
10%
500 - 599
20% *
X < = 499
100%
* No reduction of interest rate
Effective January 1, 2010 Bluegreen implemented an additional, more
stringent, FICO® Score-Based Standard:
Bluegreen Resorts
Credit Underwriting Standards
FICO ®
Minimum Cash %
X > = 600
10%
575 - 599
20% *
X < = 574
100%
* In the event a borrower goes off of pre-authorized checking, the interest rate will increase by 1%.
Interest Rates
VOI RATES & TERMS
HISTORICAL
Int. Rate
w/o
Down Payment Int. Rate Auto-Debit Max Term
10% 15.90%* 16.90% 10 years
20% 12.90%* 13.90% 10 years
50% 8.25% 8.25% 1 year
VOI RATES & TERMS
EFFECTIVE 11/01/08
Int. Rate
w/o
Down Payment Int. Rate Auto-Debit Max Term
10% 16.99%* 17.99% 10 years
20% 15.99%* 16.99% 10 years
10% 15.99%* 16.99% 7 years
50% 9.99% 9.99% 1 year
BXG VOI receivables have historically yielded significant interest income; in
November 2008 we implemented a revised interest rate program for new obligors
which has increased the YTD WAC (on non-50/50 loans through September 30, 2009)
to 16.13%; by way of comparison, the YTD WAC for similar loans through September
30, 2008 was approximately 14.95%.
How Bluegreen VOI Buyers Finance Their Purchase
*Dollar amount rounded to the nearest whole dollar.
**Note: Based on average household income of $73,000 for timeshare buyers.
Purchase Price of a Typical Vacation Ownership Interest: $13,200 100%
Cash Down Payment:
($ 1,320) (10%)
Amount Financed:
$11,880 90%
Terms of Typical Financing:
Term / Amortization: 10 years
Fixed Interest Rate: 16.99%
Monthly Payment: $ 206*
Annual Maintenance Fee/ Club Dues: $ 661
Annual Cost During Financing Period: $ 3,138* (4.3% of Income**)
Annual Cost After Financing Period: $ 661 (0.9% of Income**)
Bluegreen VOI Loan Payment Methods
Each sale facility/securitization has a separate, dedicated lockbox at Bank of
America.
There is a daily automated, repetitive wire to the paying agent for each sale
facility/securitization.
PAC/ACH/Automated
84.4%
Coupon Book
15.6%
Total
100.0%
Bluegreen’s Previous Receivables Purchase Facilities
and Term Securitizations
Purchase Facility/Term Securitization Note Amount
1998 GE Purchase Facility $100.0 MM
2000 GE Purchase Facility $ 90.0 MM
2001-A ING Purchase Facility $125.0 MM
2002-A Term Securitization $170.2 MM
2004-A GE Purchase Facility $ 38.6 MM
2004-B Term Securitization $156.6 MM
2004-C BB&T Purchase Facility $140.0 MM
2005-A Term Securitization $203.8 MM
2006-A GE Purchase Facility $125.0 MM
2006-B Term Securitization $139.2 MM
2007-A Term Securitization $177.0 MM
2008-A Term Securitization $ 60.0 MM
2009 BB&T Purchase Facility $150.0 MM
Total $ 1.7 Billion
Typical Collection Process - VOI
10 Days – Telephone contact initiated on delinquent accounts when an account is as few as
10 days past due
30 Days – Letter mailed advising the borrower (if a U.S. resident) that if the loan is not brought
current, the delinquency will be reported to the credit reporting agencies (telephone contact
continues)
60 Days – “Lock-out” letter mailed, return receipt requested and regular mail, advising that the
borrower cannot use any accommodations until the delinquency is cured (telephone contact
continues)
90 Days – “Notice of Intent to Cancel Membership” mailed, return receipt requested and
regular mail, which informs the borrower that unless the delinquency is cured within 30 days,
the borrower will forfeit ownership (telephone contact continues)
Approximately 120 Days – Termination letter mailed, return receipt requested and regular
mail, advising the borrower that the owner’s beneficial rights in the Bluegreen Vacation Club
have been terminated
The VOI is placed back into inventory for resale to a new purchaser
VOI Portfolio Performance
* In the event a borrower goes off of pre-authorized checking, the interest rate will increase by 1%.
Unlike floating rate residential mortgage loans (many of which have “teaser” rates),
the monthly payment for Bluegreen’s borrowers does not change over the life of
the loan.*
The average monthly payment (approximately $200) for Bluegreen’s borrowers is
much less than a typical mortgage payment.
The vast majority of Bluegreen’s borrowers are on PAC.
Bluegreen’s collectors have an average of 11.5 years of collections experience.
Our collections team is incentivized through a performance-based compensation
program.
In addition, Bluegreen implemented FICO® score-based credit requirements on
12/15/08 and further raised such guidelines on 1/1/10.
Portfolio Performance
Bluegreen VOI Delinquency Performance
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Total Delinquent
90 Days Delinquent
60 Days Delinquent
31 Days Delinquent