The Mortgage Bankers Association of Puerto Rico positive about 2022. See video clip about the 12 month projections for the island’s economy by Adam Greenfader, managing partner at AG&T.
La Mortgage Bankers Association of Puerto Rico (MBA) es una entidad sin fines de lucro, establecida para mantener y preservar la industria de la banca hipotecaria alentando a sus miembros a promover y llevar a cabo una práctica responsable en la otorgación de préstamos hipotecarios y en ejercer el buen juicio de la aplicación de las regulaciones locales y federales de manera que se mantenga el buen nombre y el prestigio de las instituciones hipotecarias y la credibilidad ante los consumidores.
AG&T is a real estate development and consulting company founded in 1998 with headquarters in Miami, Florida. Our track record spans over 55 real estate development projects in Puerto Rico, Sint Maarten, Costa Rica, Panama, Mexico, Dominican Republic, and various other Caribbean islands.
Andrew was previously Chairman and Chief Executive Officer of Insignia Financial Group, Inc. – which went public after three years and after merging with CB Richard Ellis became the largest owner/ operator of multifamily residential housing in the United States with approximately 275,000 apartments and over 200 million square feet of commercial space. Today, Andrew Farkas is currently Founder, Chairman, and CEO of Island Capital which presently owns a controlling interests in approximately $5 billion assets including C-III Capital Partners, NAI Global, PZR, andIsland Global Yachting or IGY.IGY is the largest owner, operator and developer of yachting oriented resorts in the world.Mr. Farkas is also dedicated philanthropist with a specific focus in the arts, children, and the environment.Today, Andrew is committed to ESG (Environment Social Governance) investments in housing, hospitality, and infrastructure, that address key social imperatives. He is particularly interested in helping the Caribbean address its migration challenges caused by economic hardship.
Some of the questions in this Video:
Puerto Rico and The Bahamas have been recently devastated by major hurricanes. What impact has this had on your lending?
Is ESG important to your fund?
Do you look at a project’s sustainable elements when making funding or acquisition decisions?
How has the Caribbean region recovered from the COVID pandemic? Do you see any long-term changes to travel, tourism, or hospitality in the Caribbean?
Do you work with island governments, with local Caribbean banks?
How important is it for you to have local players as part of your management team or funds?
IGY announced plans to achieve carbon neutrality at all facilities in the IGY network by 2025.
Can you explain this program and how you help your guests to participate in carbon offsetting of their own commercial and recreational activities.
If you could wave your proverbial magic wand for the Caribbean (Puerto Rico) what would you like to see change?
The Symposium was kicked-off by Scott McLaren, President ULI SE Florida / Caribbean. Scott spoke about the longstanding relationship and collaboration between ULI and the Puerto Rico Builders Association. He highlighted the work on the ULI National Advisory Services Panel on social, economic, and physical resilience in Toa Baja, Puerto Rico. https://seflorida.uli.org/toa-baja-puerto-rico-panel/
Scott Maclaren finished his remarks by recognizing Vanessa de Mari, the new President of the Puerto Rico Builders Association and the first women president in the organization’s 70 year history. The Symposium was dedicated to this historic accomplishment. In attendance were some of Puerto Rico’s top government leaders. This included the Honorable Pedro Pierluisi, Governor of Puerto Rico, Manuel Laboy, COR3 Executive Director, Maretzie Diaz, Deputy Director PR Housing Department CDBG-DR, Natalia I. Zequeira, Commissioner of Financial Institutions, and in attendance, the Secretary of Housing of Puerto Rico, William Rodríguez Rodríguez. The keynote address by the Honorable Pedro Pierluisi, Governor of Puerto Rico’s highlighted the island’s economic accomplishments, the end of Puerto Rico’s population exodus, and the conclusion of the bankruptcy which was officially announced the day of the Symposium.
In the private sector, Ricardo Alvarez-Diaz, CEO, Alvarez-Diaz & Villalon discussed some of progress of the island’s rebuilding after the 2017 hurricanes Irma and Maria. The reconstruction of the island was a constant theme throughout the day with specific examples of over 900 started projects.
The first panel, “Why Puerto Rico: Stories of Success, was a testament to the resiliency of the development community. Moderated by Andrew Carlson, SVP Country Manager, of JLL the discussion highlighted the historic growth of the island’s hospitality sector with the construction and/or renovation of over 3,000 new room keys from El Conquistador, Grand Reserve (formerly known as Coco Beach), Sheraton, AC , and many others. The panel included Federico Sanchez, President & CEO, Interlink Group.
Dan Kodsi, CEO, Royal Palm Companies, Rafael E. Rojo, President & CEO, VRM Companies. Also in attendance was Brad Dean, CEO, Discover Puerto Rico who highlighted the island’s impressive tourism growth (ADR and occupancy rates) during the Covid 19 pandemic and new expansion of tourism throughout all U.S. feeder markets.
As Puerto Rico seeks to build back its tourism and other industries, the financial sector will invariably play a major role. One of the goals of the Puerto Rico Symposium was to facilitate the conversation of growth in both traditional banking as well as new Fintech, IFEs, and other debt/equity players. Natalia I. Zequeira, Commissioner of Financial Institutions, explained the ease of regulations and process for new financial institutions as Puerto Rico shares many of the same regulations of the U.S. states on the mainland. Ms. Zequeira also mentioned that International Financial Entities (IFE) can now participate in special opportunity projects.
Michael McDonnell, Executive Vice President, First Bank, that recently re-opened its construction division, was bullish on the island’s economic prospects and announced that the Puerto Rico will achieve positive economic growth (GDP) this year– something it has not done in over a decade. Banesco USA announced the U.S. Department of the Treasury, will invest more than $8.7 billion through ECIP in institutions across the country – Banesco USA is the only bank recipient located in Florida or Puerto Rico.
Over the last few years, we have all hear about the 80 billion dollars of relief aid that has been allocated to Puerto Rico and is coming. In the “Myth versus Reality panel: Federal Funding Opportunities on The Island,” moderator Ella Woger Nieves of Invest Puerto Rico helped lift-up the proverbial transparency veil. Manuel Laboy, the COR3 Executive Director spoke with detailed facts of the funding by agency with FEMA authorizing 5 billion for temporary work, 21 Billion for 9,000 permanent projects and 800 that are currently under construction today. He also discussed the next wave of over 900 projects that are currently under engineering and design. Much of this work will be channeled through CDBG-DR and the PR Housing Department. Maretzie Diaz, the Deputy Director PR Housing Department, explained the process for companies wanting to participate in the island’s rebuilding of housing and infrastructure. Mahdu Beriwal, Owner/founder of EIM provided first-hand knowledge of the rebuilding work in Puerto Rico.
Keynote Speaker Pamela Pautenade, Ex. Deputy Secretary of HUD, was also on hand to share her experiences about the collaboration with the Puerto Rico Builders Association during the 2017 hurricanes crisis. In a moving conversation with Ricardo Alvarez-Diaz, Mrs. Pautenade explained the dedication of the island’s public and private sectors and dispelled any rumors about misuse of relief funds.
Puerto Rico, like much of the Caribbean is in the process of bouncing back from the Covid 19 pandemic. Adam Greenfader, who chairs the ULI Caribbean Council had a high level sit down conversation with keynote Speaker Andrew Farkas, CEO Island Capital Group. The conversation was focused on social equity and specifically what role the financial sector has in supporting the region with a particular focus on sustainability, ESG, and helping economic migrants return back to their island homes.
In the last few years Puerto Rico has become known as blockchain capital of the world. While thousands of tech savvy individuals have moved to the island to take advantage of federal tax incentives they have inadvertently created a new economic driver for the Puerto Rico.
In our “Fintech & Financial Innovation panel in Puerto Rico, Moderator Nathan Whigham, Founder & President, EN Capital discussed the growth of this huge industry. Rodrick Miller, CEO, Invest Puerto Rico, explained what his group is doing to change the paradigm in Puerto Rico from selling tax incentives to focusing on the island’s quality of labor, education system, and proficiency in bio science and other innovations. Stephen Inglis, CEO, Importal explained his new portal to monetize tax credits and Yael Tamar, CEO & Co-founder, SolidBlock explained how her company is integrating real estate and blockchain.
After a marathon day of conversation it was amazing to see the room still full for our last panel “Growth Industries and Tax Incentives” moderated by Carla Campos and an all-star team including Jorge Ruiz Montilla, McConnel Valdez, Francisco Luis, of Kevane Grant Thornton and Rogelio “Roy” Carrasquillo, of the Carrasquillo Law Group. In this panel, specific programs like the Tourism Tax Incentive were explained in detail and there was robust conversation regarding how these incentives have created new jobs in manufacturing, life sciences, construction, and agro-science.
On behalf of all of us at the Puerto Rico Builders Association and The Urban Land Institute SE Florida/ Caribbean, thank you to all of the people and sponsors that made The Puerto Rico Symposium possible. We are all hopeful that together both the public and private sector can create long lasting sustainable economic growth.
For more information about investing in Puerto Rico visit our web site or contact us.
Adam Greenfader, Managing partner of AG&T (7 minute video) speaks on new opportunities in Puerto Rico. Learning this video about the the island’s history and how you can learn from the past to generate real value and long term economic growth. The video includes new information about tax incentives, the tourism tax incentive, Act 20/22, and other tax credits for real estate development. Contact us for more information and to learn about Why Puerto Rico Now
On Tuesday, March 16, 2021 at 10:30am, we held the ULI State of the Caribbean Market Place webinar. The event boasted some of the top industry leaders in finance, brokerage, and development on what’s happening in the Caribbean hotel market. Speakers included Juan Corvinas Solans, Rogerio Basso, Alexandra Lalos, and Christian Charre, and Brad Dean. Moderated by Adam Greenfader.
AG&T Joins Over One Thousand Leaders Across the United States Affirming Commitment to Global Climate Action on the Fifth Anniversary of the Paris Agreement
Washington D.C. – December 12th marks the five-year anniversary of the world coming together to sign on to the Paris Agreement and AG&T is marking the moment by committing to a national mobilization for a clean energy economy and centering their own operations in pursuit of climate action. In doing so, AG&T joined over a thousand leaders from local governments, businesses, universities, and other institutions across the country as part of the “America Is All In” joint statement.
This joint statement will be delivered to the incoming Biden-Harris administration, as well as to United Nations officials and global heads of state at the Climate Ambition Summit hosted by the United Kingdom, also on December 12th.
“As we look to recover from the dual public health and economic crises brought on by the COVID-19 pandemic, we also look to the looming threat of the climate crisis,” said Adam Greenfader. “This is a moment to foster innovation, increase national security, and protect the health and well-being of present and future generations. In our commitment to addressing the climate crisis, we at AG&T are all in and welcome the opportunity to do our part to achieve these goals and push for bold climate action across the United States.”
The “America Is All In” declaration is organized by We Are Still In, a coalition in support for climate action and a pledge to uphold the United States commitments to reduce emissions under the Paris Agreement. With more than 3,900 organizations and institutions across all sectors of the United States, these leaders represent over half of the national population, nearly two-thirds of the economy, and more than half of the country’s emissions. While the United States officially exited the Paris Agreement on November 4th, the incoming Biden-Harris administration has committed to reentering the unprecedented global agreement.
“December 12th is more than an anniversary of an agreement, it represents a critical turning point for the future of U.S. and global climate action,” said Elan Strait, Director of US Climate Campaigns at World Wildlife Fund (WWF). “Nationally, we have stumbled in our leadership on climate action. But We Are Still In shows that there was a commitment to change in the United States that never faltered. Today’s statement from AG&T and hundreds like them across the country sends a clear message that, moving forward, we need a unified national response to the climate crisis.”
To date, the new statement has been signed by cities across the United States including St. Louis, Milwaukee, and Washington, DC, Fortune 100 businesses including Intel, Hewlett Packard, and McDonalds, and Michigan Governor Gretchen Whitmer.
“There’s never been a more important time for us to come together and accelerate the progress we’ve made to address the climate crisis than now,” said Katie Fallon, Chief Global Impact Officer at McDonald’s. “At McDonald’s, we believe we have a special obligation to help the nearly 40,000 communities we serve build a more resilient and equitable future. This global pandemic is a needed wake-up call that there is still much work to be done, and that we can only succeed if we innovate and collaborate together – that is why we are still in.”
ULI partnered with Heitman, a global real estate investment management firm, to assess the potential impacts of climate change on the long-term viability of real estate assets. Derived from a series of interviews with leading institutional investors, investment managers, investment consultants and others, the report provides members with an inside look at how real estate investors are factoring climate risk into their investment decision-making and management processes.
ULI publishes this updated report amid a global pandemic and economic uncertainty. For many, it may feel as if the priority of addressing climate change is dissipating as we face the immediate challenge of COVID-19. Although it is still too early to draw conclusions about the long-term implications of COVID-19 for our cities and the real estate industry, such a wide-scale humanitarian crisis throws the connections between environmental, social, and governance (ESG) issues and our economies into sharper focus.
However, just as the coronavirus has exposed many weaknesses, it has also shown us that we have the ability to adapt and change our behaviors quickly and radically.
Globally, most major economic hubs are in coastal, river delta, or other high-risk areas. These locations present many advantages, relating to connectivity, trade, quality of life and placemaking. These cities house more than half the global population, with much higher percentages of residents in some regions. About 80 percent of U.S. residents live in cities, for example, 39 percent of the European Union population lives in metro areas with 1 million or more inhabitants.
In 2020 (as of October 7), there have been 16 weather/climate disaster events with losses exceeding $1 billion each to affect the United States. These events included 1 drought event, 11 severe storm events, 3 tropical cyclone events, and 1 wildfire event. Overall, these events resulted in the deaths of 188 people and had significant economic effects on the areas impacted. The 1980–2019 annual average is 6.6 events (CPI-adjusted); the annual average for the most recent 5 years (2015–2019) is 13.8 events (CPI-adjusted).
Many of the most economically powerful coastal cities face significant climate risk. However, these cities offer some of the most attractive investment environments, meaning that the risk is worth the return. “We have a dilemma that some of the most attractive markets are also markets that are affected more by weather-related risks,” noted one real estate investment manager. However, a few investors indicated that they are beginning to suspend acquisitions or take steps to reduce their real estate footprint in city markets where they harbor climate-risk concerns. The phases after a big disaster, according to one interviewee, were to see the market buoyed up by subsidies and insurance, followed by rebuilding and speculative demand. This short-term “sugar high” of disaster support, insurance claims, and opportunistic investment likely masks underlying negative and fiscal impacts that could be exacerbated by future climate-related events (or other shocks).
The research found a number of misleading correlations, such as flooding having a positive impact on cash solvency and fiscal health, and hurricanes increasing budget solvency. However, the current model of contingencies will not be sustainable with the expected increase in the frequency and intensity of climate change impacts, as well as slow-moving stresses such as sea-level rise, which further exaggerate the effect of peak events. In other words, a weather-related event has not yet adequately “shocked” the system of contingencies as to break it. However, the COVID-19 crisis may prove to be the ultimate shock to the system that breaks it. What happens when that “extreme event” is no longer a geographically or temporally discrete event?
“There are three big mechanisms through which costs are likely to increase going forward: one is insurance, [and] the second area is . . . tax rates and the third is cost of financing as banks start to cost the added risk.
Most interviewees also expressed overall uncertainty about future insurance prices and the likely market impacts of shifting insurance policy. In an extreme scenario, some investors envisioned a future in which properties could not qualify for insurance at all and therefore became ineligible for loans. The annual insurance pricing structure can underpredict risk for longer hold periods, as well as for the underpinning infrastructure. The approach also assumes the long-term availability of underwriting capabilities, in terms of the affordability and availability of products. If sites are unable to obtain insurance, they will not be eligible for loans, leading to major potential valuation consequences.
Long-term focus: In lay terms, catastrophe models simulate “thousands of versions of next year,” not “thousands of successive years.”
All agreed that valuation is currently lagging behind recognition of climate risk and anticipate this changing in the near future. Valuation does not incorporate climate risks because it is “backward-looking”. Models typically do not allow a user to modify future climate conditions, and there are no established best practices to apply insights from climate science to catastrophic hazard risk modeling. Valuation has become more urgent for investors considering longer time horizons. Some investors have also informally discussed properties having “expiration dates” after which they may no longer be safe or suitable for residential or business use without extensive investment in surrounding infrastructure.
Anticipating steep declines in building value because of climate impacts runs counter to how buildings are currently valued. In the current model, value is derived from the residual value of the land and structure, plus discounted cash flows over time that drive net present value and cap rates. However, if dramatic changes lead the value of the structure and land to approach zero, cap rates would change significantly, with a steep decrease in value after purchase, and would need to be offset with increased cash flow and profitability to maintain net present value.
Several discussed efforts to design risk mitigation strategies for vulnerable assets and price these costs into deals. Some also spoke about resilient design as presenting opportunities to differentiate assets and enhance value. For example, one interviewee said they were exploring opportunities to create a “resilience zone” for entire neighborhoods.
Parametric insurance, where insurance payouts are linked to when predefined event parameters such as extreme weather events are met or exceeded, is an emerging option. Industry leaders note that parametric insurance may become more widespread, but it is not an appropriate solution for all scenarios. The Caribbean Catastrophe Risk Insurance Facility (CCRIF) is one example of a regional fund. #heitman
AG&T is committed to being part of the climate solution. AG&T joined over a thousand leaders from local governments, businesses, universities, and other institutions across the country as part of the “America Is All In” joint statement. To learn more click here.