Big shout out to everyone who joined us at our 2023 ULI Pitching Caribbean Capital or Shark Tank last week. It was a great event with over 50 people live and many others who joined on-line throughout the Caribbean. Big shout out to Akerman LLP for hosting this event.
The selected project winners brought forth an excellent offering, each with its unique set of opportunities and financial highlights. Brad Lamensdorf at Sandy Point in Turks and Caicos, Andrew Carlson, CRRP, CRX, CSM, CLS / Nathan Whigham in the Town Center at Palmas del Mar, Puerto Rico.
#uli is the world’s oldest and largest network of real estate and land use experts, and we currently boast 45,000 global members. Our #ULISEFloridaCaribbean district council includes over 1,300 people and covers over 300 different Caribbean islands.
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.
The Governor of Puerto Rico Pedro Pierluisi made the historic announcement at The Puerto Rico Symposium in Miami that Puerto Rico was officially out of bankruptcy. The message was well received by over 250 industry leaders from both the public and private sectors. The event was organized by The Urban Land Institute South East Florida / Caribbean and The Puerto Rico Builders Association.
Governor Pedro Pierluisi makes historic announcement
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, Brad Dean, Rafael Rojo, Andrew Carson
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.
Adam Greenfader, Ricardo Alvarez-Diaz, Pamela Pautenade, Vanessa de Mari, Alfredo Martinez, Emilion Colon
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.
Andrew Farkas, Adam Greenfader
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.
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.
As the world struggles to return back to normal from the Covid19 pandemic, environmental concerns continues to loom as an area of great concern for world and the Caribbean region in particular. What strategies have institutional capital, developers, reinsurance companies and owners in the Caribbean pursued to protect their properties from climate-related risks? Do these resilience investments make business sense as a development objective? What has the capital market response been? And how have developers and property owners measured their success?
Speakers:
Jan Raes, ABN AMRO Global Sustainability Advisor
Esteban Biondi, ATM Associate Principal
Koen Waterstudio NL, Co-founder
Adam Greenfader, AG&T, Managing Partner
Topics to Include:
1. What is the capital doing about investing in resilient projects?
2. How are developers integrating resiliency practices into their projects?
3. The $ of Resiliency – Beyond the ULI Heitman Report
4. Aquatic Architecture: is it just a matter of Time?
Join AG& T and the Bisnow team on September 24th as we unpack everything you need to know about capital markets, the lending and investment climate, who’s buying and who’s selling, how to land your next deal, and how to weather future unpredictable factors.The National Real Estate Finance Summit has historically been the most esteemed, high-level, and best attended event in the nation. This year, Puerto rico will be highlighted at the event with a selection of the top industry professionals in law, tax, construction, finance and development. Mark those calendars because as always, Bisnow promises plenty of networking opportunities to connect in a fun and fast-paced atmosphere in the Big Apple. For more information. See you there!
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:
To discuss a list of hospitality projects that are getting funded in the Caribbean Region, share details on projects and the funding
Bahamar project and case study
Sources of hotel financing and the interplay of mezzanine financing
The synergy of luxury cruise ships and private islands
The business of Cannabis in the Caribbean
The effect of Hurricanes on hotel supply and competition
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.
Last April 9th U.S. Department of Housing and Urban Development’s Deputy Secretary, Pamela Hughes Patenaude, along with Congresswoman and Resident Commissioner, Jenniffer González- Colón, met with the Puerto Rico Builder’s Association’s (PRBA) leadership along with the Mortgage Bankers Association (MBA), Puerto Rico Chapter, the Puerto Rico Bankers Association, and Puerto Rico Real Estate Landlord Association.
During the meeting the group spoke about the status of Puerto Rico’s recovery and reconstruction process after hurricanes Irma and María made landfall last September. Among other topics, Hughes Patenaude made a significant announcement of $18.4 billion to be granted by HUD to support long-term disaster recovery for Puerto Rico. It is hoped that this grant will help rebuild communities impacted by past disasters and protect them from major disasters in the future.
The funds are to be provided through the Community Development Block Grant Disaster Recovery Program (CDBG-DR), which grants support to a variety of disaster recovery activities including housing redevelopment and rebuilding, business assistance, economic revitalization, and infrastructure repair.
Conway + Partners brings an innovative approach to every project. I am impressed by their level of market knowledge, professionalism, and creative genius.
Conway+Partners is a full-service, integrated branding and marketing agency, headquartered in NYC, that specializes in the real estate and hospitality industries.
Santiago Conway says it best:
Working with a diverse roster of global clientele, we are driven by creativity and innovation to garner real world results. Our signature approach and dedication to sharing our expertise means we act as more than an external creative partner – we become a member of the team. Our efficiency, cooperation and all hands on deck approach ensures a successful final result, whether a classic luxury property or innovative new hospitality concept.
A new rental market epicenter that could significantly influence South Florida residential real estate trends for years to come is slowly taking shape around Biscayne Bay in Miami-Dade County.
At first glance, the residential real estate markets of Greater Downtown Miami and the Miami Beach neighborhood of South Beach — defined as stretching from South Pointe Drive north to 41st Street — are distinctively different.
South Beach is an international destination known for historic Art Deco buildings, celebrity sightings and a legendary late-night club scene.
South Beach’s sandy shore, which is a must-see for swimsuit-clad visitors, often makes the lists of the best beaches and people watching in the world.
Contrast this with Greater Downtown Miami, and its rocky-bottom shore, which features numerous modern high-rises, a well-documented problem with the homeless, and a happy-hour culture resulting from the numerous professional office workers in the area.
Despite the stark differences, lease prices are increasingly growing similar as the two areas morph into one large rental market that effectively stretches from the Julia Tuttle Causeway south to the Rickenbacker Causeway, and the Atlantic Ocean west to Interstate 95.
The last two real estate cycles that were fueled by out-of-town investors — who purchased condo units with the intention of leasing out the properties to tenants — have worked to create an expansive variety of luxury and economic rental options on both side of Biscayne Bay.
The mainland and the barrier island alike now feature a number of new projects by so-called star architects, a variety of high-end hotels, and a growing number of luxury retailers.
Expanded trolley bus services and the arrival of car-sharing companies such as Uber and Lyft is making it ever easier to travel between the mainland and barrier island without a fear of finding — or affording — a parking spot.
Reports that the city of Miami Beach is “pushing forward” with plans for the long-discussed Bay Link light-rail passenger service connecting the barrier island and the mainland would likely only work to expedite an evolutionary process that is already underway in the two rental markets.
Prospective tenants from the western suburbs of South Florida together with new arrivals to Miami-Dade County have bolstered the existing demand for rental properties in the Greater Downtown Miami-South Beach market.
Consider that in 2015, tenants leased nearly 9,500 properties at a median monthly lease price of $2.51 per square foot in this Greater Downtown Miami-South Beach rental market compared to the oldest readily available rental statistics from 2011 when less than 7,350 properties were rented at a median monthly rate of $1.97, according to data from the Southeast Florida MLXchange.
For context, the median monthly rental price was $1.84 per square foot for all leases completed east of Interstate 95 and/or South Dixie Highway in Miami-Dade County in 2015 compared to $1.47 per square foot in 2011, according to the data.
Despite the spike in prices around Biscayne Bay, the Greater Downtown Miami-South Beach area is outpacing in rental rates and leasing activity the Miami-Dade County market east of I-95 and/or South Dixie Highway, according to the data.
Drilling down deeper into the statistics shows that the median monthly rental price in South Beach was only about 10 cents per square foot more than in Greater Downtown Miami in 2015 and 2014.
By comparison, tenants in South Beach paid on a median monthly basis about 13 cents more in 2013 and 22 cents more in 2012 than in Greater Downtown Miami, according to the stats.
Indications are the difference in rental prices on the barrier island and mainland could continue to shrink given the amount of properties available for lease in South Beach compared to Greater Downtown Miami.
Based on the 2015 leasing activity, South Beach currently has about 4.5 months of supply available for rent. Greater Downtown Miami, by comparison, has about three months of supply currently on the market.
A balanced residential real estate market is considered to have about six months of supply available for lease. More months of supply suggests a tenant’s advantage and less months indicates a landlord’s advantage.
The unanswered questions going forward is whether the resale price premium being paid for South Beach condo units will continue to be the norm as Greater Downtown Miami increasingly garners some of the highest rents in the tricounty South Florida region.
