Gov’t hopes major tourism ventures will boost economy
Two investment groups announced plans this week to shell out a combined total of more than $460 million in separate acquisitions that will significantly strengthen Puerto Rico’s status as a high-end luxury resort destination, government officials hope.
New York investment firm Paulson & Co. said it would invest $260 million to create two high-end luxury resorts in the heart of San Juan’s Condado district. The firm’s plans for the historic Condado Vanderbilt and La Concha Renaissance Hotel, and the adjoining Condado Vanderbilt condominiums will fill an important niche in Puerto Rico’s tourism industry by bringing world-class luxury to the popular Condado district.
In unrelated announcement, the Encanto Group said it would invest $200 million to develop a world-class beach and marina community on the island’s east coast. The firm, which has operations in Puerto Rico and the mainland United States, acquired the Punta Candelero Beach Resort and the Marina at Palmas del Mar, about 45 minutes from San Juan.
The acquisition includes the Solarea Beach Resort luxury condominiums, The Yacht Club Marina and 24 additional acres of waterfront slated for future development.
The two deals, which were facilitated by the Department of Economic Development and Commerce, provide more evidence that Puerto Rico’s economic development efforts are paying off as the island’s economy rebounds, agency officials said.
“Adding high-end properties to Puerto Rico’s hotel mix is an important part of the government’s economic development strategy,” Economic Development and Commerce Secretary Alberto Bacó said.
“These investments are a major boost for the tourism sector. The Paulson & Co. investment will restore the grandeur of one of the stars of our all-star island. The Encanto investment will enhance the tourist experience in the island’s prime destination resort,” he said.
Critics however, said the price paid for the Condado property was a low-ball offer for such a historic component of the high-traffic tourism sector.
As this media outlet reported in October 2012, the Government Development Bank — which helped to pay for more than half of the costs associated with renovating the properties — was considering a request by operators International Hospitality Enterprises Inc. to convert the $165 million construction loan it obtained from the Puerto Rico Tourism Development Fund, a GDB subsidiary, into a permanent loan.
The total development budget for the Condado Duo Project was $276.2 million: $141.1 million for La Concha and $135.1 million for the Vanderbilt. The government lent $165 million and private financing took care of the remaining balance of $111 million.
At the time, the GDB said it was looking into alternatives for the project’s permanent financing.
‘Epitome of luxury’
The Condado Vanderbilt was the epitome of luxury and the envy of the entire Caribbean when it opened in 1919.
John Paulson, the founder of Paulson & Co., said he intends to make the hotel the most luxurious in San Juan. The Condado Vanderbilt is in heart of Condado, the epicenter of luxury in Puerto Rico and home to designer stores, fine dining restaurants and upscale apartment buildings.
At present, the Vanderbilt’s condo hotel tower with 235 studio units and one-bedroom suites that sold for prices ranging from $450,000 to $800,000 remains shuttered, as are the most of the facilities throughout the property.
In Palmas del Mar, the completion of The Yacht Club Marina, scheduled for May 2014, will create Puerto Rico’s only resort-marina, with 158 boat slips, including 40 designed for yachts of up to 175 feet. The project is also expected to generate about 400 jobs.
“The tourism industry contributes significantly to our gross national product and the luxury market is one of the leading niche markets in the industry, with a rate of annual growth higher than the rest of the industry,” said Ingrid I. Rivera, executive director of the Puerto Rico Tourism Company.
“Development of luxury properties such as these will continue to place Puerto Rico back into its privileged position as a premier Caribbean destination with its diversity, easy access and excellent service,” she said.
The Paulson & Co.’s investment in the Condado properties follows the firm’s investment last year in the St. Regis Bahía Beach Resort and the Bahía Beach Resort & Gold Club. The planned community, located about 25 minutes from San Juan’s airport, includes two miles of pristine beach and an 18-hole golf course designed by Robert Trent Jones Jr.
Bacó and his team have worked closely to facilitate Paulson & Co.’s investments in Puerto Rico, which are expected to total as much as $2 billion by the end of 2015.
“John Paulson is just one of many savvy investors who seek attractive opportunities in Puerto Rico,” Bacó said. “We expect to have more good news to announce soon.”