Are Hotels Coming Back to The Caribbean?

Are Hotels Comming Back Caribbean

Join an all-star panel to discuss “Are Hotels Coming Back to the Caribbean?” : a ULI discussion on The State of the Caribbean Hotel Market.

 

Hear from leading Caribbean hospitality professionals about what’s happening from operations, investing, transactions, and lending perspectives.

 

 

Adam Greenfader

Managing Partner AG&T

 

Alejandro Zozaya

Executive Chairman, Apple Leisure Group

 

Christian Charre

Senior Vice President, CBRE Hotels

 

Chris Cylke

COO, REVPAR International, Inc.

 

 

Nicholas Hecker

Executive Managing Director/Chief Investment Officer, 

Sculptor Real Estate

 

Three questions answered: 

 

1. What hotel transactions are happening today?

2. Is the hotel market going to undergo a series of defaults, acquisitions, and repurposing?

3.  What operational changes is the hospitality industry doing to successfully come back on line?

 

 

 

The State of Tourism in Latin America and Caribbean with IDB Invest

Rogerio Bass

ULI Caribbean Conversation

“The role of multilateral development banks (MDBs) in supporting the tourism sector in Latin America and the Caribbean”.

Conversation with with Rogerio Basso, Head of Tourism at IDB Invest and Adam Greenfader, Chair ULI Caribbean Council / Managing Partner AG&T.

  • * State of affairs of the tourism sector prior to COVID-19?
  • What makes this crisis different than prior ones?
  • What tourism players are doing to mitigate the impact of the pandemic?
  • Top three actions to better face this crisis?

 

Rogerio Basso leads all initiatives related to tourism in Latin America and the Caribbean for IDB Invest, the private sector arm of the Inter-American Development Bank Group. In his capacity as Head of Tourism, he is responsible for origination, investments and for executing IDB Invest’s tourism strategy in the region, offering a variety of financial instruments including debt, mezzanine and equity. Rogerio has executed numerous tourism transactions in the region spanning from hotels to conference centers.With over two decades of experience in banking, private equity, development, and strategy consulting within the hospitality and real estate sectors, Rogerio has held a variety of positions across top global firms, working across a variety of domestic and foreign markets, with a strong focus in Latin America. Prior to joining IDB Invest, he was CIO at Key International, a Miami-based real estate investment platform active across many industry sectors. He also served as EVP Acquisitions & Development for Terranum Hotels, an owner and operator of hotels across Latin America, sponsored by Colombia-based Santo Domingo Group and Sam Zell’s Equity International.

 Rogerio holds a business degree from the College of William and Mary and a master’s degree from the School of Hotel Administration at Cornell University.

The Elimination of Section 936

Zaida Feliciano Queens College

The repeal of Section 936 resulted in lost manufacturing jobs for the USA and a 15 year economic crisis for Puerto Rico. 

As we sit today in the middle of a world pandemic, a few things seem certain. COVID 19 is a health crisis that has forever changed our relationship with globalism. It is time for a new understanding of how manufacturing keeps us all safe. This is especially true of the pharmaceutical industry. With shortages of basic supplies, medicines and protective gear, is it time to bring critical manufacturing back to the United States?

In this AG&T Thought Leadership conversation, we speak with economics professor Zadia Feliciano (see bio)of Queens College and explore the consequences for the USA and Puerto Rico of eliminating the manufacturing tax incentives –  Section 936.

In her groundbreaking work on Section 936, entitled, “US Multinationals in Puerto Rico and the Repeal of Section 936 Tax Exemption for U.S. Corporations“, professor Feliciano and Andrew Green, “analyze the effects of the phase out and elimination of Section 936 on the number of establishments, value added, employment, and wages in Puerto Rico’s manufacturing.  

Unfortunately, the elimination of Section 936 helped push critical manufacturing AWAY from the USA. Critical manufacturing left Puerto Rico (USA) and  sought cheaper markets in Mexico, Ireland, Latin America and China.

Moving Forward.

The Food and Drug Administration has for some time been expressing concern that the United States is too dependent on China within the medical supply chain. Puerto Rico has 49 FDA-approved pharmaceutical plants in place, and produces not just one quarter of all U.S. pharmaceutical exports, but also significant amount of medical devices.

Puerto Rico’s manufacturing industry is in need of support, but is also in a position to blossom, similar to other areas of the country that used to have a strong manufacturing base. In the area of pharmaceuticals, Puerto Rico has the advantage of an educated workforce and many people experienced in the industry. Puerto Rico produces 25% of the pharmaceuticals exported by the United States. This is more than any State. The Island has the cold chain logistics for pharmaceuticals in place. The learning curve would be lower for Puerto Rico than for many other U.S. regions. The time to act is now.

To learn more about how Puerto Rico can help USA manufacturing. 

Historic Times

Dear Clients and Friends,

We are living in historic times, challenges…and opportunities. While we are sure you have received many notes like this, we wanted to share that AG&T remains healthy and available to help or to listen when and if the need arises. We intend to respect social distancing yet will be steadfast to remain virtually close. We want to invite you to our webinar where we will expand on the notes below. Keep an eye out for an invitation to the virtual seminar coming your way soon.

How Are We Making Business Decisions?

This is new territory for all of us. While we do not possess the proverbial “crystal ball”,  our world view, and the planning framework we are suggesting to our clients, is that while this interruption is likely to be quite profound and deeply impactful, it should prove to have been temporary. Our planning framework contemplates a recovery of the US economy during the second half of 2020.  Delaying projects and investments already in the pipeline should be carefully considered, and everyone should keep a keen eye for opportunities driven by distress. We are already seeing some signs of distress, and expect much more in the weeks to come. AG&T is not fundamentally altering our long-range plans, our team structure, or making other rash changes.

We revisit this outlook weekly, and will communicate updates as we go along. We are participating fully in global efforts to “flatten the curve” in terms of the virus’ spread. AG&T  is fortunate that our travel schedules and cross office staffing processes – in place for years – have made it relatively easy for us to transition further to a virtual workplace. Every AG&T team member has full technological and practical abilities to work remotely and this transition has been relatively seamless for us.

What Are We Working On?

AG&T remains fully engaged and doing value add work for our clients. This includes:

Management Consulting. One of the hallmarks of AG&T’s strategy planning work is to achieve maximum value and mitigating risk at all stages of the development life cycle.  We are helping our clients implement and adjust their strategy plans, understand changing market conditions, and helping firms think through cash management and risk mitigation practices. Fortunately, most of our clients in the middle of strategy planning or development consulting engagements have chosen to continue working on them, which we believe is prudent.

Acquisition and Disposition Services. Our large institutional clients are asking us to review and revise investment velocity, provide real time feedback on development risks, highest and best use valuations, and evaluate viable capital stacks for acquisitions. As you would expect, many large investors are thinking through buy opportunities that may emerge as the markets normalize and how they might respond to them.

Market Research. Many of our clients understand that to be in business in the spring and summer, or when transaction activity resumes, they will need up-to-date market research, and an even more cogent formal discussion of the market rationale for a proposed investment or development, including a discussion of the impact and long-term effects of the interruption and/or the virus.

How Are We Living Out Core Values?

Tough times reveal the strength of a company. These are some of the ways we are putting our values into action:

1. Putting Families First.

Above all else, we are doing all that we can to support the health and emotional well-being of our team and their loved ones. This requires a lot of work and flexibility, but to date we are heartened to see the enhanced team spirit and discipline of mutual support that we believe is the hallmark of our culture.

2. Being Generous.

AG&T is committed to a belief that we can be a force for good at least in small ways. We realize that the impact of this disruption will be felt unequally across our communities; especially in small islands where medical systems are poorly funded. As one example, AG&T’s mission is to make a meaningful difference in the practice and policy of sustainable development. We will continue to work in facilitating the construction of resilient communities, sustainable hotels, and promoting thought leadership with our network of top professionals worldwide.

3. Help Where We Can.

Above all else we will honor our commitment to help our clients whenever and however we can, and to honor those relationship as long-lasting bonds based on trust. When our phones ring, we answer.  We are available for guidance, for ideas, or just to listen.

Expect to hear from us in the days and weeks to come. And expect to be business partners with us for years to come after this. We hope for a speedy recovery from the challenges at hand, and are confident that our team, our friends and our clients, collectively the Best Minds in Real Estate, will be bold in charting the way forward. We may not know exactly what the journey holds, but we will come out on the other side. As the Coronavirus is novel, so will come creative solutions, new approaches and innovative ways of surviving together. For tomorrow will return to normal someday.

As always, we welcome your thoughts and comments, and wish you and yours all the very best. Stay healthy, safe, and positive.

Valuing Climate Risk in the Built Environment

 

Valuing Climate Risk in the Real Estate

January 29, 2019 – Miami, Florida

Facilitated by Zac Taylor, PhD (Research Fellow, University of Leuven) and Adam Greenfader (Managing Principal, AG&T; chair of Caribbean Council of ULI Southeast Florida/Caribbean) Participants included individuals representing development, insurance, sales, master planning, public sector, legal, and academic perspectives.

 

Key Messages

  1. The economics of real estate in South Florida face several medium- and long-term challenges due to climate risk.
  2. Climate risks place pressure on the ability to create sustainable value from real estate in the region, including increasing costs of finance (insurance, investment, property tax), growing cap and op ex, and negative market perceptions.
  3. Proactive local action will be key, but not sufficient, to mitigate these concerns.
  4. Decision-maker education and collaboration, in part through ULI, will be essential to secure regional change.

Thematic Observations

Insurance – Property Rates and Terms

  • Insurance is geared towards the sudden and acute, not the gradual and chronic. Supply of capital for Florida risk is declining and will continue for those who continue to build in risky areas.
  • Risk of losing coverage over medium-term (eg 5-10 year hold period) is increasingly raising concerns about profitability of developer strategy in South Florida.
    • Eventually property owners cannot pass cost of insurance on to consumers/tenants – this will erode asset value.
  • Insurance rate baselines are 15-20% higher post-2017/18/19 underwriting cycle due to historic losses. Rates are cyclical to an extent, but unclear if this pattern will persist in context of growing losses, rising risk because insurers increasingly set rates according to reinsurance investor appetite (see ILS market).
  • Insurance policy terms are changing, and likely to continue, to limit insurer liability for losses. Requires careful scrutiny.

Location Investment Decisions

  • Institutional capital providers increasingly ask developers to address risks through asset-level mitigation.
  • Investors are also asking what community-scale measures are being put in place, in recognition that assets are not independent from broader risk/resilience patterns.

Public Finance

  • Bond ratings agencies increasingly looking at municipal creditworthiness in relation to economic exposure to climate risk (e.g. property tax base security). This may have impact on cost of capital.

Design and Mitigation Considerations

  • Public investments can have negative as much as positive impacts on private property (see Miami Beach road-raising) — this is cost and time intensive work, in part because it is politically contested and in part because of local public sector capacity.
  • Insurers likely to determine how, where development happens. Access to risk models has changed one participant’s understanding of their practice, re: valuation and incorporation of long-term risk reduction principles in design, building code, planning

Collaboration / ULI Opportunities

  • South Florida communities need a collaborative plan to address the economics of built environment climate risk. Without it, insurers and lenders will leave the market, and negative feedback loop (property devaluation) will be faster.

 

 To learn more: uli-selected-to-manage-southeast-florida-regional-climate-compact-project

ULI Roundtable on Climate Resilience in The Netherlands

ULI Roundtable on Climate Resilience in The Netherlands

 

 

ULI Climate Resilience Roundtable

 

The ULI Roundtable on Climate Resilience in The Netherlands was held to discuss how hurricane destruction in the Caribbean (and specifically Puerto Rico, Sint Maarten in 2017 and the Bahamas in 2019), reveals an urgency to rethink urban resilience and regeneration in the Caribbean. The ULI Roundtable brought together Dutch planners, designers, architects, engineers, financial institutions, developers, and investors to discuss new solutions and share global best practice. Specific issues focused on the Dutch knowledge and leadership on climate mitigation across urban design, development and investment. The two speakers included: 

Mr. Adam Greenfader, Chair of the ULI SE Florida/Caribbean Council – shared experiences and outcome advice from the ULI Advisory Services Panelists in the Municipality of Toa Baja, Puerto Rico after the catastrophic and deadly 2017 Hurricane Maria.

Mr. Henk Ovink, Dutch special envoy to the United Nations on Water, and flood expert shared insights into global climate change challenges and the Dutch resilience plans for both the Netherlands and Dutch Caribbean.

Some of the works discussed:

 

 

 

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.

Thought Leadership in Action

Hannah Greenfader Headshot Cartoon

 

Thought leadership in action

 

Congratulations to Hannah Greenfader,  one of our past thought leaders on helping achieve the Hazon Seal of Sustainability!  Your efforts are greatly appreciated and so needed in this time of great climatic change.

Hannah Greenfader is interned with the Miami- Dade County Office of Resilience researching sea-level rise strategies and creating content for educational programs about sustainability and resilience in Miami. 

Today, Hannah is program associate at World Wildlife Fund which was was founded in 1961 and is the largest privately supported international conservation organization in the world. As program associate, I am responsible for supporting “America Is All In” which is the most expansive coalition of leaders ever assembled in support of climate action in the U.S.

For more information about the AG&T thought leadership program contact us here.

 

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. Our thought leadership program includes mentoring students from the University of Miami Master of Real Estate Development program in finance, sales, and Caribbean development.

 

 

 

Hannah Greenfader Headshot Cartoon