Caribbean Hospitality Summit Draws Record Numbers

Bisnow Caribbean Hospitality

Investor Sentiment For Rebuilding The Caribbean Region Remains Strong

Miami, Florida – The Bisnow Caribbean Hospitality and Tourism Summit held on August 1, 2019 at the Intercontinental Hotel in Miami drew over two hundred investors, developers, hotel operators and other industry professionals.  

Sponsored by the Puerto Rico Builders Association, this “not to miss” investor event celebrated its 3rd year.  Special shout out to Katya Demina for her help in making the event such a great success. Join us for more events at AG&T. 

Strong turnout at the first 2019 ULI Caribbean Roundtable Panel

Strong turnout at the first 2019 ULI Caribbean Roundtable Panel.
Presentations by Emilio Colon Zavala, President of the Builders Association of Puerto Rico, Ricardo Alvarez Diaz of AD&V, Robbie Karver of EY and chaired by Adam Greenfader of AG&T. Big Shout out to Julie Medley, Mallory Baker, Max Helden and the whole ULI Southeast Florida team for putting this amazing event together.

 

 

 

Some of the biggest takeaways:

  • Growth is forecasted at a 8.1% with growing airlifts. In spite of the tumultuous 2017 hurricane season, the occupancy rates were around 65% in 2018 and should peak back up to 70% across the region in 2019.
  • Access, Access, and Access continues to be the principal driver for hospitality. 
  • “The Caribbean region today is seen as a maturing destinations with more diversified land offerings”, quoted Robbie Karver.
  • Looming recession talks in US was downplayed for the Caribbean region as the lack of a significant of new supply (compared to 2008) should help bolster the region.
  • Caution was noted about citizenship programs (CIP) for several Caribbean governments not necessarily generating revenues as expected.
  • Smart money is looking at Puerto Rico with lots of incentives for tourism development, tax benefits for those wanting to move/start business on the island (law 20/22), and billions of dollars of recently approved US Federal grants. 95% of Puerto Rico is an Opportunity Zone. 
  • Institutional capital seeking better rates than on the US mainland although Caribbean hospitality lending is ‘cautiously optimistic’ with focus on shorter ramp up period of less than three (3) years.
  • There is strong demand for world class Marinas and for Big-Big yachts.
  • Resiliency is getting into new developments and is having very little negative effect on the IRR.

Other Events 

The roundtable conversation highlighted a series of events that will be taking place in 2019 (email adam@agandt.net for a full schedule).

  • MAY 2, ULI MEMBER APPRECIATION SOCIAL & POST TOA BAJA PANEL UPDATE (Puerto Rico).
  • AUG 1 CARIBBEAN HOSPITALITY SUMMIT – PR BUILDERS (Miami)
  • OCT 23-25 ULI Mexico – Latin America Conference (Cancun)
  • NOV 14 PUERTO RICO BUILDERS ASSOCIATION CONFERENCE (Puerto Rico)

Vision Awards

ULI will be highlighting development projects of excellence at its Annual Vision Awards Event which will be held on September 5that the JW Marriott Marquis. If anyone would like to submit a Caribbean project please contact Mallory.Barker@uli.org

Coming Next

For the next roundtable the following items were discussed as potential areas of interest:

  1. To discuss a list of hospitality projects that are getting funded in the Caribbean Region, share details on projects and the funding
  2. Bahamar project and case study
  3. Sources of hotel financing and the interplay of mezzanine financing
  4. The synergy of luxury cruise ships and private islands
  5. The business of Cannabis in the Caribbean
  6. The effect of Hurricanes on hotel supply and competition
  7. Sargassum seaweed and its adverse effects on the region

This first meeting was open to ULI members and guests.  Subsequent roundtables will require membership for participation.  Please email Max.Helden@uli.orgif you need details on joining.

Puerto Rico After The Hurricanes: Investors And Bitcoin Cowboys Are Circling

By Deirdra Funcheon as Published in Bisnow South Florida

Puerto Rico has been desperate for aid that has been too slow and insufficient following hurricanes Irma and Maria in 2017. But a few on the island say the attention followed might ultimately be a net positive for the commonwealth. “The bottom line is that Puerto Rico in the next two to three years is expected to see strong growth — 3 to 3.5% of GDP,” said Adam Greenfader, principal of Miami-based AG&T Development and Advisory Services. “It hasn’t had growth in 12 years. A depression is defined as negative economic growth for three quarters, so for all intents and purposes, Puerto Rico has been in a depression for 12 years.”

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Greenfader married into a family that facilitates Section 8 housing throughout Puerto Rico. He then became a developer there himself. Currently, he serves as the liaison to the Puerto Rico Builders’ Association and the chair of the Urban Land Institute’s Caribbean Council. Greenfader points out that while last summer’s hurricanes devastated the commonwealth, jobs had already been scarce for more than a decade as the government faced a crippling debt crisis, owing $123B and declaring bankruptcy last spring. Though an estimated 150,000 Puerto Ricans fled to the U.S. mainland after the hurricanes, between 60,000 and 70,000 residents had already been leaving each year of the crisis. Puerto Rico’s current population is about 3.5 million, down from a peak of about 4 million, Greenfader said.

Turnaround efforts began years ago. Reforms enacted in 2012 enticed businesses and high net worth individuals to relocate to Puerto Rico by taxing corporate profits at a flat 4% and eliminating taxes on dividends, interest and capital gains for anyone who resided at least half the year in Puerto Rico. For anyone selling a company or large amounts of stock, these measures could result in saving millions of dollars on taxes. Famously, Putnam Bridge Funding CEO Nicholas Prouty invested more than $100M and relocated his family. Billionaire John Paulson bought several hotels. Michael E. Tennenbaum founded Caribbean Capital & Consultancy Corp. Goldman Sachs and various hedge funds moved in and bought distressed mortgages for pennies on the dollar. 

Greenfader said that about 1000 high net worth individuals moved to the island, and about 200 are coming each year. Cottage industries sprung up to cater to these ultra-wealthy.  Then last year’s hurricanes blew through, knocking out power and killing 64 people directly and 4,645 in total, according to Harvard University. Though the U.S. government responded painfully slowly, $18B in aid has been approved from the Department of Housing and Urban Development, and billions more are expected, Greenfader said.

Recovery is slow, but happening. Tesla built a solar array to power a children’s hospital. Doctors are being offered tax incentives to stay in Puerto Rico. Private insurance companies have started to pay claims, so 60% of hotels are now operational, Greenfader said. He believes that when the economy improves, exiles will move back. 

Publicity around the hurricanes certainly brought attention to the commonwealth. Immediately after the hurricanes, only about half of Americans knew that Puerto Rico was part of the United States; that number has since risen to 76%. Following the disaster, dozens of cryptocurrency entrepreneurs relocated to San Juan to buy hundreds of thousands of acres of land, take advantage of the tax structure and set up a “crypto utopia.” Greenfader suggested there is more opportunity for economic recovery: Puerto Rico’s tourism industry makes up only 6.5% of gross domestic product, whereas on many Caribbean islands, that figure is 50% or more. That is by design, he said; in the 1950s and ’60s, laws were structured to keep out the Mafiosos who ran Cuba. It could be increased substantially. 

Furthermore, the island has long had a mishmash system of collecting property taxes, partly because so many homes are built informally or illegally — “People get a paycheck, buy [a] few beers, invite their friends and family over to build a wall at a time,” Greenfader said — and partly because the tax code hasn’t been revised since 1950s. “A property worth a million dollars might pay no more than $2K, $3K in taxes for a year,” Greenfader said. A better system of collecting taxes could be implemented to make the government more solvent.  Although he is optimistic, Greenfader acknowledged the challenges.

While Puerto Rico is a diverse society, where rich and poor have long mixed freely, the influx of people taking advantage of the tax breaks is “adding an upper class the island never had before,” he said, and there has been some blowback. Workaday employees are facing pension cuts and austerity measures as Puerto Rico grapples with its debt. Currently, according to Democracy Now, 55,000 residents are in foreclosure and the government is turning to privatization as the solution for economic woes, which will enrich investors but hurt the working class. In a Bloomberg article Monday about the search for someone to buy the country’s beleaguered electric company, which goes so far as to ask potential buyers how they would like to be regulated, a Puerto Rico resident said, “We are tired of people coming here to get rich and take advantage of us.”  Some grass-roots organizations have taken shape to resist Wall Street — forces that author Naomi Klein explores in a new book, “The Battle for Paradise: Puerto Rico Takes On the Disaster Capitalists.”

Greenfader noted that insurance premiums will likely continue to rise, and the Jones Act, a shipping law that requires goods to stop in a mainland port, makes commodities expensive. Whatever economic policies prevail, at least new construction on the island should be more resilient. Greenfader said builders already adhere to codes that mirror Miami-Dade’s, which were made stronger after Hurricane Andrew in 1992. They use reinforced concrete and no wood. Going forward, he said, there is a commitment to using more sustainable designs, particularly in the energy space, such as solar power arrays and micro electric grids. Today, about 10,000 customers in Puerto Rico who lost electricity after last year’s hurricanes are still without power. 

 
Read more at:https://www.bisnow.com/south-florida/news/economy/puerto-rico-hurricanes-john-paulson-nick-prouty-89403?be=rudecourt%40gmail.com&utm_source=Newsletter&utm_medium=email&utm_campaign=wed-13-jun-2018-000000-0400_south-florida-re

Adam Greenfader Named Chairman Florida Puerto Rico Builders Association

Adam Greenfader

 
  San Juan, Puerto Rico Adam Greenfader was recently named Chairman of the Florida Liaison Committee of the Puerto Rico Builders Association (PR Builders Association). For over sixty years, the PR Builders Association has been the island’s leading professional construction and development group. The PR Builders is responsible for government lobbying and networking. The Builders Association consists of high-level professionals in the residential, hospitality, industrial and commercial sectors.

“We are honored to have Adam Greenfader chair this new committee. Mr. Greenfader has been part of our organization for many years, is a tested professional in both markets and has a wealth of knowledge that will be a great asset,” exclaims Arch. Ricardo Álvarez-Díaz, president of the Builders of Puerto Rico.

The Mission of the Florida Liaison Committee is to be a bridge between Florida and Puerto Rico. The goal is to support  builders, bankers, investors and other professionals. The committee aims to facilitate access to services, information, and key contacts. “Our goal is that the PR Builders Association is seen as a first and most important stop for anyone that wants to expand to either market,” says Adam Greenfader. In the last couple of years, with the passing of laws 20 and 22, Puerto Rico has seen a significant increase of interest from companies and individuals from the US mainland. There are also great opportunities for Puerto Rican companies that want to export their services and products, and use Florida as a first stepping-stone. The Florida Liaison team is in the process of developing key stakeholders relationships and organizing its events for 2016 in both Florida and Puerto Rico. If either you or your company is interested in participating, you may contact Mr. Adam Greenfader at adamgreenfader@gmail.com or call the Builders Association at 787.751.1471. Learn more about the Puerto Rico Builders association here.   
  San Juan, Puerto Rico Por más de sesenta años, la Asociación de Constructores ha sido el principal grupo profesional de construcción y desarrollo. Esta organización ha sido responsable de promover el intercambio de información entre desarrolladores, inversionistas, miembros asociados y profesionales, en el desarrollo y la construcción de Puerto Rico. La Asociación de Constructores consiste en profesionales de alto nivel en el sector residencial, hotelero, industrial y comercial.

“Nos sentimos honrados de tener a Adam Greenfader dirigiendo este comité. El Sr. Greenfader ha sido parte de nuestra organización por muchos años, y es un profesional con gran conocimiento de ambos mercados”, indica el Arq. Ricardo Álvarez-Díaz, presidente de la Asociación de Constructores de Hogares.

La misión del Comité de Enlace de la Florida es la de ser un puente entre la Florida y Puerto Rico, apoyando y anudando lazos y relaciones entre constructores, banqueros, inversionistas y otros profesionales en ambos países. El objetivo del comité es facilitar el acceso a servicios, información y contactos claves. “Nuestra meta es que la Asociación de Constructores de Puerto Rico sea vista como el primer y más importante paso para la persona y/o empresa que desee expandir su negocio a cualquiera de estos mercados”, explica Adam Greenfader. Durante los últimos años, Puerto Rico ha visto un aumento significativo en el interés de empresas e individuos del continente de los Estados Unidos con la implementación de las leyes 20 y 22. Existen además, grandes oportunidades para empresas puertorriqueñas que deseen exportar sus servicios y productos. Éstos ven a la Florida como un buen primer paso. El equipo del Comité de Enlace de la Florida está en proceso de desarrollar relaciones profesionales y organizar sus eventos para el 2016 en Florida y Puerto Rico. De estar interesado en ser parte del comité, puede contactar al Sr. Greenfader por correo electrónico adamgreenfader@gmail.com o llamar a la Asociación de Constructores al 787.751.1471.