18 Billion For The Next Great Construction Boom

 

 

San Juan, Puerto Rico.

Last week The Puerto Rico Builders Association held its 70th year conference in San Juan Puerto Rico. The historic event was inaugurated with a conversation on Financing the Next Great Economic Construction Boom.  The panel included Michael McDonald, Executive Vice President and Group Director at Firstbank, Luis Alemañy President and CEO at the Economic Development Bank of Puerto Rico, and Eric Delgado Business Banking Relationship Manager at Acrecent Financial Corporation and Adam Greenfader, Managing Partner at AG&T.

It was clear from the conference panelists, that after more than fifteen years of stagnate growth, Puerto Rico appears ready to build back better. Billions of dollars of FEMA and CDBG-DR funds are being allocated in what will be the largest government funding program in US history.  While much of the Federal funds will be used to subsidize projects, the group was in agreement that there is a huge need for private investment and capital to bridge the financing gapMichael McDonald, Executive Vice President and Group Director at Firstbank, made the historic announcement that the bank is opening up its construction division. Several members from the newly formed team were present in the packed room including Carlos Navarro and Mei Li Tsai Rivera. “There is no better indicator of an economy that is ready to grow that when a bank reopens its construction division”, quoted Alfredo Martínez-Álvarez, Jr., Chairman of the Puerto Rico Builders Association.

Equally promising, Luis Alemañy President and CEO at the Economic Development Bank of Puerto Rico, was asked about the much awaited CDBG-DR funding. Mr. Alemañy explained that the Economic Development Bank of Puerto Rico has already started allocating over $225 Million dollars to small entrepreneurs. The group was especially receptive to the fact that the grants are being disbursed in $50,000 tranches and does not require repayment.

Since 2008, Puerto Rico has gone from twelve financial institutions to less than four. Eric Delgado Business Banking Relationship Manager at Acrecent Financial Corporation, sees a new role for niche lenders filling that gap in Puerto Rico.  He specifically discussed how Acrecent can play a role in funding new construction projects. “We are able to get to funding much faster than traditional banks and also have the capacity for higher loan to coast ratios.  Both Firstbank and Acrecent mentioned that capital is seeking anywhere from 25%-35% of project equity.

“As Puerto Rico gets ready to build thousands of much needed homes, critical infrastructure and other key projects, it will be up to both private and public institutions to step up and provide the much needed capital and leadership”, quoted Adam Greenfader of AG&T.  All of the panelist were in agreement that the island in the next few years is ready for strong growth. They specifically mentioned that in addition to the more than 8 billion dollars of Federal Grants, Puerto Rico has one of the most robust tax incentives and credit programs in the world. The hospitality incentive with a 40% tax credit was specifically highlighted as a very strong component of any capital stack today.

Helping to plan a better future for the island, The Puerto Rico Builders Association will be holding its annual conference on September 20 and 21, 2022.  Speaking and sponsorship opportunities are available and you may contact AG&T at contact@agandt.com.

 

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.

 

Helping Puerto Rico since the 1950’s

Puerto Rico 1950's

70 years ago, when the Puerto Rico Builders Association was formed, the United States was on the brink of entering the World War II. December 7, 1941, would be considered a day that would “live in infamy”. Thousands of Puerto Ricans as American citizens fought in the War and would return home as victors to an island on the precipice of great economic growth.  Thanks in large part to Operation Bootstrap, o “Manos a La Obra”, the Puerto Rico Builder’s Association has played a vital role in shaping the island’s long term economic development. The Puerto Rico Builders Association (formerly known as the Homebuilders Association) was formed in a critical period of time when the island was undergoing a massive transformation from an agricultural society into a leading manufacturing hub.

Puerto Rico would see historic growth for more than three decades and the Puerto Rico Builders Association would play a leading role in shaping the island’s zoning regulations, environmental protections, financing, and building codes (often referred to as a Miami’s building code on steroids).  Puerto Rico benefited greatly from these concerted efforts by the Puerto Rico Builder Association with one of the highest homeownership rates in the Western world at 68%. Puerto Rico is also the second largest public housing jurisdiction in the United States second only to New York City.

In 2015, The Puerto Rico Builders Association, under the leadership of then PR Builders president, Ricardo Alvarez Diaz Villalon joined forces with the Urban Land Institute Southeast Florida/Caribbean District Council. ULI founded around the same time as the PR Builders Association, is one of the oldest and largest networks of real estate and land use experts in the world. ULI’s mission is to shape the future of the building industry and create thriving and sustainable communities around the globe. Shortly thereafter, Puerto Rico was devastated with two back-to-back category five hurricanes.

Hurricanes Irma and Maria destroyed most of the island’s electrical infrastructure and informal housing stock at a cost estimated over 100 billion dollars. ULI together with the Puerto Rico Builders Association created a task force to study the effects of the storms and how to build back better. Under then ULI president Greg West, the Puerto Rico Builders Association and ULI convened national panel of experts and created a specific action plan for the municipality of Toa  Baja.

The Puerto Rico Builders Association BoardThe Puerto Rico Builders Association and ULI have since held multiple meetings and conference throughout the years in both Puerto Rico and Miami to explore new areas of synergy and improvements to the island’s build environment. ULI’s current president, Scott McLaren was recently quoted, “we strongly value our long standing partnership with your organization and admire the leaders who go above and beyond, especially when faced with such tremendous obstacles.”

Come celebrate 70 with the Puerto Rico Builders Association Puerto Rico on October 27-29 in San Juan. https://constructorespr.com/convencion-2021/

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.

 

 

Puerto Rico’s Hotel Industry Takes Center Stage in Miami

 

 

 

Puerto Rico takes centerstage at the Caribbean Hospitality Investment Summit (CHRIS) held this week at the Hardrock Hotel in Miami.

 

The Puerto Rico Builders Association, one of the sponsors of the CHRIS event, was honored to congratulate Hugh Andrews, CEO, IHE as he received the Lifetime Achievement Award. The award was presented by Vanessa Ledesma Acting CEO and Director at Caribbean Hotel and Tourism Association.  Vanessa, herself a great friend and native of Puerto Rico, discussed with Hugh Andrews his vast accomplishments that include the development of such Icon hotel properties as the Conquistador Hotel, El Convento, Las Casitas, and Vanderbilt Hotel.

 

STR in its annual report, listed Puerto Rico’s year over year recovery from 2019 as one of the Caribbean’s  top destinations. This includes maintaining strong airlift throughout the pandemic, maintaining high ADRs, and an impressive 82% Occupancy rate. The recently delivered Aloft San Juan hotel was named as top CHRIS hospitality development of 2021.  Adam Greenfader, Managing partner of AG&T and Florida Liaison Chair of the Puerto Rican Builders Association,  spoke on the success of the P3 program in Puerto Rico. He mentioned in the Public-Private Collaboration panel that the island will be soliciting a P3 bid for the management of the 9 remaining local and national airports.

 

Kenny Blatt, Principal/Managing Partner of CPG Real Estate, spoke extensively on Puerto Rico’s hospitality industry. He discussed the island’s capacity to greatly expand its hospitality and tourism sectors.  Blatt’s was enthusiastic about the transformation at Dorado Beach, A Ritz-Carlton Reserve and its evolution since 1958.   His key takeaways on Dorado Beach’s success include working with local partners as a critical best practice. Blatt praised the Stubbe family and PRISA group repeatedly as “ the greatest developers any resort can ever have.”

 

The Puerto Rico Builders Association will be celebrating its 70 year anniversary at its upcoming conference on October 27-28, 2021. For more information visit https://constructorespr.com

 

State of the Caribbean Hospitality Market: Capital Markets, Lending, and the Road to Recovery

State of the Caribbean Hospitality Market: Capital Markets, Lending, and the Road to Recovery

On March 16, 2021, at a time when much of the global hospitality industry remained in crisis, the Urban Land Institute Caribbean Council convened one of its most comprehensive discussions on the future of Caribbean tourism and hotel investment.

The webinar, “State of the Caribbean Marketplace,” brought together an exceptional panel of leaders representing institutional lending, development finance, hotel brokerage, destination marketing, and investment to examine the unprecedented challenges facing the hospitality sector and, more importantly, how the industry could emerge stronger.

Moderated by Adam Greenfader, Managing Partner of AG&T and Chair of the ULI Caribbean Council, the discussion featured:

  • Juan Corvinas Solans, Managing Director, Head of International Hotel Finance

  • Rogerio Basso, Head of Tourism, IDB Invest

  • Alexandra Lalos, hospitality investment professional

  • Christian Charre, Senior Vice President, CBRE Hotels

  • Brad Dean, CEO, Discover Puerto Rico

Rather than focusing solely on the immediate effects of COVID-19, the panel explored the deeper structural changes taking place across the hospitality industry and capital markets. The discussion provided valuable insights into lender responsibilities, investor behavior, hotel valuations, operational resilience, and the future of Caribbean tourism.

A Crisis Unlike Any Other

One of the central themes of the conversation was why COVID-19 differed fundamentally from the Global Financial Crisis of 2008–2009.

While both crises placed tremendous pressure on the hospitality industry, their underlying causes—and therefore the appropriate responses—were entirely different.

The Global Financial Crisis originated within the financial system itself. Excessive leverage, declining real estate values, and failures in the banking sector led to a widespread credit contraction. Liquidity evaporated, financing became scarce, and many otherwise viable projects were unable to refinance their debt. Banks faced solvency concerns, and distressed asset sales became commonplace as lenders worked through troubled portfolios.

COVID-19 presented an entirely different challenge.

Hotels did not fail because of poor underwriting or excessive leverage. In many cases, they entered 2020 with healthy balance sheets, strong occupancies, and positive cash flow. Instead, the pandemic abruptly halted global travel through government-imposed restrictions and public health measures. Demand disappeared almost overnight, not because travelers had lost interest in tourism, but because they simply could not travel.

This distinction fundamentally changed the role of financial institutions.

The Responsibility of Lenders During Extraordinary Times

One of the most compelling discussions centered on the responsibilities of lenders during a crisis that was not caused by borrowers.

Panelists emphasized that traditional loan enforcement strategies would not serve either lenders or borrowers under these unprecedented circumstances.

Instead, many financial institutions adopted a collaborative approach that focused on preserving long-term asset value rather than maximizing short-term recoveries.

Throughout the Caribbean and internationally, lenders worked closely with hotel owners to provide temporary payment deferrals, covenant waivers, loan modifications, maturity extensions, and other restructuring solutions designed to bridge the industry through the temporary disruption.

This represented a significant evolution in lender philosophy.

Rather than forcing widespread foreclosures, financial institutions recognized that preserving high-quality hospitality assets would ultimately benefit borrowers, lenders, investors, employees, and local economies alike.

The discussion highlighted an important lesson from the Global Financial Crisis: unnecessary liquidations often destroy long-term value. In contrast, patience and partnership can preserve both businesses and communities during periods of extraordinary uncertainty.

Capital Never Left the Market

Another important takeaway was that while travel had stopped, investment capital had not.

Institutional investors, private equity firms, family offices, sovereign wealth funds, and hospitality-focused lenders continued to study the market throughout the pandemic.

Many viewed the crisis as a temporary interruption rather than a permanent impairment of Caribbean tourism.

The panel discussed how sophisticated investors were actively preparing for recovery by evaluating acquisition opportunities, recapitalizations, refinancing transactions, and development sites well before travel resumed.

This confidence reflected the industry’s belief that the Caribbean’s long-term fundamentals remained intact:

  • World-class tourism destinations

  • Limited beachfront supply

  • Strong luxury demand

  • Growing interest in wellness and experiential travel

  • Continued expansion by international hotel brands

  • Attractive long-term demographic trends

As history has shown, many of these investors were well positioned to participate in one of the strongest tourism recoveries in the world.

The Evolution of Hotel Finance

The conversation also explored how financing structures were evolving.

Lenders increasingly emphasized sponsor quality, operational expertise, liquidity, and business continuity planning alongside traditional underwriting metrics.

Hotel operators were expected to demonstrate greater flexibility in managing costs, staffing, technology adoption, and guest experience.

Developers likewise began integrating resilient design, sustainability, wellness amenities, and mixed-use programming into new projects, recognizing that these features would become increasingly important to both guests and capital providers.

The pandemic accelerated trends that were already reshaping hospitality finance.

A More Sophisticated Investment Environment

Rogerio Basso provided valuable insights into the role of development finance institutions in supporting tourism throughout Latin America and the Caribbean.

Unlike traditional commercial lenders, multilateral development banks often provide patient capital that can continue flowing during periods of market uncertainty. Their participation not only supplies financing but also reinforces investor confidence, promotes sustainable development, and encourages higher environmental and governance standards.

Christian Charre shared perspectives from the hotel transaction market, illustrating how valuation methodologies were adapting in response to temporary operating disruptions. Rather than relying solely on current cash flow, investors increasingly focused on normalized performance and long-term replacement value.

Brad Dean discussed the remarkable resilience of travel demand and emphasized that tourism remained one of the world’s most powerful economic engines. While the pandemic temporarily interrupted mobility, the human desire to travel, connect, and experience new destinations remained fundamentally unchanged.

Looking Back

Several years later, many of the observations shared during this discussion proved remarkably accurate.

The Caribbean experienced one of the fastest tourism recoveries globally. Hotel occupancies rebounded, average daily rates reached record levels in many destinations, institutional investment returned, branded residences flourished, and major international hotel companies accelerated expansion throughout the region.

Perhaps most importantly, the industry demonstrated that collaboration among lenders, investors, operators, governments, and development institutions could preserve long-term value even during periods of extraordinary disruption.

AG&T’s Commitment to Caribbean Thought Leadership

The State of the Caribbean Marketplace webinar reflected AG&T’s broader commitment to advancing meaningful conversations about the future of Caribbean real estate and hospitality.

Through its leadership within the Urban Land Institute Caribbean Council, collaborations with industry organizations, and partnerships with public and private sector leaders, AG&T has consistently created forums where investors, lenders, developers, hotel operators, policymakers, and academics can exchange ideas and shape the future of the region.

The conversation was never simply about surviving the pandemic.

It was about understanding how crises reshape industries, how responsible lending preserves markets, and how thoughtful leadership can position Caribbean hospitality not merely for recovery, but for long-term growth.

The lessons remain just as relevant today. Strong destinations are built not only through exceptional hotels and visionary developments, but through resilient financial systems, collaborative partnerships, and leaders willing to think beyond the next business cycle.

Could this be the year for Puerto Rico?

Adam Greenfader
 
 

Could this be the year for Puerto Rico?

 

It had been almost 12 months since my last visit to Puerto Rico. Thanks to the COVID lockdown expectations were low. The last time I visited, more than 2 years after hurricanes Irma and Maria, the devastation was still overwhelming.  Streets were lined with garbage, electrical lines in disrepair, and thousands of homes had roofs covered in blue tarps. This combined with more than ten years of economic recession made has made Puerto Rico extremely pessimistic. As I landed in Luis Munoz Marin Airport, I was thinking,  “Would the ensuing earthquakes and COVID pandemic ravage the economy even more…”

 

I travelled the entire island from coast to coast –  100 x 35 miles, in a two week period. I drove from San Juan to Aguadilla, Mayaguez, Ponce, Humacao, Fajardo, and Ocean Park.  The roads were in good condition, the street lights working, and many buildings newly painted.  Notwithstanding the COVID crisis, the economy was bustling.  Most palpable was the positive attitude and feeling of the people. I spoke with many colleagues and friends and was told that much of the hurricane insurance had circulated through the economy.  The 8-12 billion in Federal relief from CDBG-DR is expected by early 2021.  Homemade signs seeking construction workers can be seen throughout the island that read, “Se Solicita Carpinteros y Albanilles”.

While the tourists were clearly absent ‘en mass’, a handful of new boutique hotels, especially in San Juan, have been recently delivered between 2019-2020. Much of this new hotel activity is due in part to the Tourism Tax Incentive. The tax incentive provides up to 40% of the total project’s cost back to sponsors…incredibly, some of it can be used for funding as part of the initial capital stack.  While this is not common anywhere in the world, Puerto Rico’s is not a typical Caribbean destination. The total economic activity (GDP) in Puerto Rico is less than 7% for all tourism related activities.  This includes, hotels, trades, conventions, excursions, etc..   This is an astonishing low number for an island that is surrounded by warm water, beautiful beaches, and lush landscapes. Read more about why Puerto Rico is like this at: https://agandt.com/contact-why-puerto-rico-now/

These tax incentives combined with a team of dedicated individuals in the Destination Marketing Organization (DMO) –  Discover Puerto Rico and other Public Private Partnerships (Invest Puerto Rico) is helping to make Puerto Rico a thriving tourism destination. The island currently boats some of the top hotels in the Caribbean with ADR’s over $1,500 per night.  Much of this demand is generated by the Act 20/22 (now Act 60).  For the last five years, hundreds of high net worth US individuals have moved to Puerto Rico to take advantage of zero Federal capital gains.  Act 60 has resulted in over 500 families and hundreds of new business moving to Puerto Rico.  There seems to be no end in sight for these new Americans living in Puerto Rico.  

Dorado Beach

This week Puerto Rico also inaugurated for the first time in over 20 years, the same political party. The PNP or US Statehood party won the election with a mandate for political stability, reduced corruption, and closer ties with the United States. While the island’s economic crisis is far from over, the COVID pandemic has put Puerto Rico back in the spotlight for its manufacturing proficiency. The island of Puerto Rico is one of the world’s leading pharmaceutical destinations – producing more than the top 5 US States combined. As thousands of jobs come back to the USA-Puerto Rico, invariably many will end up where the cost of labor is 15% less expensive, and there is a 60 year culture of robust manufacturing.

 

So is this the year for Puerto Rico?  Strong yes if you are involved with affordable housing, luxury resorts, alternative energy and critical manufacturing.

While we at AG&T do not have the proverbial ‘crystal ball’ on the island’s long term economic growth, things feel like they are on the right track and we will have more clarity with the resolution to the island’s bond crisis, the electrical authority privatization (AEE), and the completion of the responsibilities of The Fiscal Oversight and Managemnt Board for Puerto Rico. 

ULI | Heitman Report

 

 

CLIMATE RISK AND REAL ESTATE

Excerpts from the 2020 ULI | Heitman Report.

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.

See full report at : https://knowledge.uli.org/en/Reports/Research%20Reports/2020/-/media/b81db4bbc77845f7834f24b0e974dd7a.ashx

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.

 BlackRock, the world’s largest asset manager, made headlines in January 2020 when Larry Fink, the firm’s CEO, stated in his annual letter on corporate governance that “climate change has become a defining factor in companies’ long-term prospects,” and “we are on the edge of a fundamental reshaping of finance.” The BlackRock announcement signified an increasing industry prioritization of climate change mitigation, or efforts to prevent or reduce greenhouse gas emissions.

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. 

Returns on Resilience: Why Sustainable Design Has Become One of the Best Investments in Caribbean Hospitality

ULi Speakers

Returns on Resilience: Why Sustainable Design Has Become One of the Best Investments in Caribbean Hospitality

For decades, sustainability was often viewed as an aspirational goal—a desirable feature that enhanced a project’s brand, improved public perception, or satisfied environmental objectives.

Today, that conversation has fundamentally changed.

Across the Caribbean, resilience has evolved from an environmental initiative into one of the most important drivers of long-term financial performance.

Developers, institutional investors, lenders, insurers, hotel operators, and governments increasingly recognize that resilient design is no longer optional. It is becoming a prerequisite for preserving value, attracting capital, reducing operating risk, and ensuring that hospitality assets remain competitive for generations.

At AG&T, we have long believed that the future of Caribbean development lies at the intersection of economics, engineering, hospitality, and environmental stewardship.

That belief inspired one of the Urban Land Institute Caribbean Council’s most forward-looking conversations: Returns on Resilience, bringing together internationally recognized experts from finance, architecture, engineering, and sustainability to examine how resilient design is reshaping real estate investment.

The discussion featured:

  • Jan Raes, Global Sustainability Advisor, ABN AMRO

  • Esteban Biondi, Associate Principal, ATM

  • Koen Olthuis, Co-Founder, Waterstudio.NL

  • Adam Greenfader, Managing Partner, AG&T

Together, the panel explored a fundamental question:

Can resilience create superior investment returns?

The answer was a resounding yes.

Sustainability Has Become a Financial Strategy

Institutional capital has undergone a profound transformation over the past decade.

Major pension funds, sovereign wealth funds, insurance companies, banks, and private equity firms increasingly evaluate climate resilience alongside traditional underwriting metrics such as location, occupancy, and projected cash flow.

Today’s investors ask very different questions:

  • Can this property withstand stronger hurricanes?

  • How will sea level rise affect long-term value?

  • What is the projected cost of insurance over the next twenty years?

  • How resilient are the building systems?

  • Can the project maintain operations following a major storm?

  • Does the development reduce long-term environmental risk?

Increasingly, these answers influence financing decisions, insurance pricing, investment returns, and exit valuations.

Resilience has become a core component of fiduciary responsibility.

The Economics of Resilience

The discussion emphasized that resilient development should not be viewed simply as an added construction expense.

It should be viewed as an investment.

Resilient projects often benefit from:

  • Lower long-term operating costs

  • Reduced insurance premiums

  • Improved access to financing

  • Stronger lender confidence

  • Higher institutional investor interest

  • Faster post-storm recovery

  • Greater asset liquidity

  • Improved guest confidence

  • Longer building life cycles

  • Enhanced long-term property values

For hospitality assets in particular, every day a hotel remains operational after a major storm protects revenue, employees, guest relationships, and brand reputation.

The financial value of remaining open can far exceed the incremental cost of building resiliently from the beginning.

Beyond Green Building

The conversation also challenged a common misconception.

Sustainability is not simply about achieving certifications or incorporating environmentally friendly materials.

True resilience requires a comprehensive approach that integrates architecture, engineering, infrastructure, energy systems, coastal protection, water management, emergency planning, and long-term operational strategy.

Developments must be designed not only to survive future climate events—but to continue operating through them.

That shift represents a new philosophy for Caribbean development.

Rather than designing for average conditions, projects must increasingly be designed for future conditions.

Learning from the Dutch

Perhaps one of the most fascinating discussions centered on aquatic architecture and the remarkable experience of the Netherlands.

For more than a thousand years, the Dutch have lived with water rather than attempting to conquer it.

Long before climate resilience became a global priority, Dutch engineers, planners, and architects developed sophisticated strategies for flood management, floating communities, adaptive infrastructure, and integrated water systems.

Companies such as Waterstudio.NL have transformed centuries of accumulated knowledge into innovative approaches that are now being implemented around the world.

For island nations throughout the Caribbean, these lessons are becoming increasingly relevant.

As sea levels rise and coastal environments evolve, the question is no longer whether architecture should respond to water.

It is how quickly we are prepared to embrace that reality.

Aquatic architecture is not science fiction.

It represents an evolution in urban planning that includes floating homes, floating hotels, adaptive marinas, amphibious structures, floating public spaces, and waterfront communities designed to work in harmony with changing environmental conditions.

For the Caribbean, where coastlines define both our identity and our economy, these ideas deserve serious consideration.

Hospitality’s Next Competitive Advantage

Hospitality has always depended upon extraordinary locations.

Many of the world’s finest resorts occupy beaches, bays, lagoons, and waterfronts that also happen to be among the most environmentally vulnerable landscapes on earth.

Protecting these destinations requires more than stronger buildings.

It requires integrated planning that combines resilient architecture, renewable energy, advanced water management, nature-based coastal defenses, intelligent infrastructure, and thoughtful master planning.

The most successful hospitality destinations of the future will likely be those that embrace resilience not as a regulatory requirement, but as a defining competitive advantage.

Guests increasingly value destinations that demonstrate environmental leadership.

Investors increasingly reward projects that reduce long-term climate risk.

Lenders increasingly recognize resilience as an indicator of stronger underwriting.

Insurance providers increasingly differentiate projects based upon mitigation strategies.

The market is beginning to place a measurable premium on resilience.

AG&T’s Vision for the Caribbean

At AG&T, resilience has never been viewed as a niche topic.

It is central to how we think about Caribbean development.

Throughout our work across Puerto Rico, Sint Maarten, and the wider Caribbean, we continue to advocate for development strategies that combine world-class hospitality with resilient infrastructure, renewable energy, regenerative design, and innovative coastal planning.

Our collaboration with global experts—from Dutch aquatic architects and sustainability advisors to institutional investors and hospitality leaders—reflects our belief that the Caribbean has an opportunity not simply to adapt to climate change, but to become a global laboratory for resilient tourism and coastal development.

The islands have always been defined by their relationship with the sea.

The next generation of Caribbean hospitality will be defined by how intelligently we choose to live with it.

Designing sustainably is no longer about branding.

It is about building stronger businesses, protecting communities, preserving irreplaceable destinations, and creating hospitality assets capable of thriving for generations to come.

For the Caribbean, resilience is no longer simply good environmental policy.

It is good economics.

New Hotel Announced in St. Maarten

Site Plan of Hotel

INDIGO BAY–Two prominent real estate development firms have partnered with Cay Bay Development (CBD) NV, the master developer at Indigo Bay Development, to propose the development of a US $220 million luxury hotel resort and condos in St. Maarten.  AG&T provided advisory services and a group of independent real estate brokers led by Adam Greenfader at Oceanfront International Group at Douglas Elliman coordinated the transaction. 

 

 

The proposed high-end hotel development at Indigo Bay Development,  is expected to feature certain luxury accommodations and five-star amenities, including 94 hotel rooms and suites, and 130 residential homes. Additionally, the proposed hotel development is expected to feature large water ponds and greenery areas in keeping with its eco-centric vision, as well as an extensive public parking area for public beach access to Indigo Bay.

  “The timing for such a development could not have come at a more opportune time, as country St. Maarten is tasked with creating new and innovative strategies to counter the global economic crisis due to the pandemic,”.

In an economy whereby hospitality and tourism are at the centre of its recovery, it is expected that the development of a high-end branded hotel in St. Maarten would provide an enormous boost to this endeavour by enhancing several areas in tourism.

 

Hotel Concept at Indigo Bay

 

According to the release it can enhance St. Maarten’s global attractiveness as a prime tourist destination; increase hotel accommodation by approximately 20 per cent; increase the number of annual visitors to St. Maarten by 32,000 based on hotel occupancy of 65 per cent (double) and an average stay of five nights; and attract high value tourists who may choose St. Maarten as a vacation destination as opposed to accessing surrounding islands through its air and sea ports of entry, it was stated in the release.

The proposed world-class hotel development, once completed, will be managed by an internationally-recognised hotel brand, which will lend itself to greater global recognition, the release said. The projected marketed average daily rate (ADR) for hotel rooms at the proposed new hotel development is expected to be substantially higher than the current average daily rates on St. Maarten.

The CBD and the principals of the proposed hotel development seek to assure that the interest of the citizenry and of the environment are paramount to their endeavor.  Six acres of the overall hotel site of about 18 acres is projected as a green zone, including the retention ponds that were originally constructed at Indigo Bay Development by CBD. 

For more information about Caribbean hotel opportunities contact us 

Critical Manufacturing and Puerto Rico USA

Luis Fortuno and Congresswoman Jennifer Gonzalez

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The panelists :

 

 

 

The ULI Webinar has an incredible array of information crammed into 90 minutes and it gives a great snapshot for the many initiatives being introduced and planned to help the Puerto Rican economy and create more quality jobs. If I had to some it up in three words, Mo is back. Mo of course being momentum.

 Each of the speakers brought a different perspective. Congresswoman Gonzalez Colon noted her primary mission is the reconstruction of the Island and to shephard the many supporting bills recently introduced in the US Congress. Former Governor Luis Fortuno brought an informed Wash DC think tank perspective, Adam Greenfader is one of Puerto Rico´s most passionate advocates, Andy Carlson of JLL (Jones Lang LaSalle) brings experienced commercial  insights from the world´s second largest public brokerage firm, Dr Deusch stated his case for the reasons he brought his Swiss/German manufacturing business to Puerto Rico because of a need for precision and reliability, while Noel Zamot has a finger on the ethical pulse of developing new business in Puerto Rico.

The conversations were upbeat and positive. For instance, Congresswoman Colon made a presentation on MMEDS which was introduced last month to Congress under the bill H.R. 7527. This bill provides tax incentives and tax credits for companies creating manufacturing plants and jobs in economically distressed areas in the US and its territories. The criteria for distressed is even stricter than the recent Opportunity Zone legislation passed in late 2017. When the Congresswoman showed the MMEDS qualifying maps there were smaller areas in very non desirable locations in the US whereas Puerto Rico literally had a much larger proportional area in some desirable locations. And she stated very clearly that MMEDS is one of the very few legislative items that is drawing bi-partisan support from both sides of the aisle.

The entire panel then weighed in on the competitive advantages that Puerto Rico has when competing with the mainland U.S. including much lower labor costs by as much as 60% lower in some cases, an experienced manufacturing labor force going back 100 years, the University of Puerto Rico at Mayaguez which is a top 10% engineering school for the entire U.S. and which is very much geared to provide the engineering and chemistry talent to support Puerto Rico´s manufacturing base. That even today five of the top ten selling drugs internationally are produced in Puerto Rico and 12 of the top 20 pharmaceutical companies have plants in Puerto Rico. Luis Fortuno noted that Puerto Rico had more than $40 billion USD in pharmaceutical exports in 2019 but has the capacity to increase this substantially. The panel noted that some closed down plants are almost in turnkey conditions should manufacturers wish to return or expand capacity. It would not take much. Maybe a recession of the Jones Act, or at least an exemption for an extended period of time, might be the necessary catalyst. There are some interesting new developments on this front as was evidenced last week by Hawaii noting that 85% of their informed populace is all for rescinding the Jones Act as it costs that Island 1.2 billion USD in additional transportation and cost of goods fees.

Progress is being made on seeking some type of exemption under the taxing provisions of GILTI as it adds a 10%+ tax on profits for CFCs (controlled foreign corporations) which unfortunately applies to the US territories since the do not fall under the IRC (Internal Revenue Code). On May 1, 2020, Congresswoman Stacey E. Plasket, representing the US Virgin Islands, filed Bill HR 6648 – the Territorial Economic Recovery Act, that if becomes law, it will exclude our territories from much or all of the GILTI taxation, under certain provisions.

On April 3, 2020, Congresswoman Jennifer González, resident Commissioner for Puerto Rico, introduced Bill HR 6643, the Securing National Supply Chain Act of 2020, to provide various tax credits to Economically Distressed Zones, including a tax credit on the amount of wages paid by an employer to employees in such a zone. The proposal has some overlap with HR 7527 noted above.

President Trump’s Special Representative for Puerto Rico’s Disaster Recovery,  Rear Admiral Peter Brown, lead two delegations to Puerto Rico in August 2020, the last visit being last week. I am told the trip was very successful as a big priority was to visit and understand the many advantages of pharmaceutical manufacturing in Puerto Rico.  AG&T is committed to bringing our network top information and access to our industry’s leaders.