Trump’s Panama Hotel Builder Seeking to Restructure $220 Million of Bonds


News from Panama / Thursday, October 20th, 2011

This article from Bloomberg mentions an interview with my friend Kent Davis who has extensive experience in condo sales in the City and quite a few sales at Trump Tower.  As some of the other towers come on line and notices go out to buyers to close , there will be more deposits left behind and developer resales at good discounts.  There are more buying opportunities like this coming up that we are aware of and we can recommend.  This in from Bloomberg.

Newland International Properties Corp. is seeking to restructure $220 million of bonds used to finance construction of Panama’s Trump Ocean Club, Donald Trump’s first hotel and apartment complex to open outside the U.S., the property’s chief financial officer said.

The company plans to present a proposal within two weeks and hopes to have an agreement before a bond payment of $41.9 million comes due on Nov. 15, Trump Ocean Club CFO Catalina Rodriguez said in a telephone interview from Bogota.

“We have clients who have requested mortgages, but the banks in Panama are not disbursing the money fast enough,” Rodriguez said. “Our plan is to go to bondholders to request some special conditions or to see if they can work with us while we get the money out of the banks.”

Single-room units at the Trump Ocean Club marketed for $350,000 are now going for about $180,000, Kent Davis, a broker with Panama Equity Real Estate, said in an interview. A glut of high-end apartments caused building occupancy rates in Panama City to drop to 50 percent in the last half of 2010, down from 69 percent over the previous six months, the real-estate broker CB Richard Ellis Group Inc. said in July.

Gapstone Group LLC, a New York based financial firm, is advising Newland and a restructuring is “very possible,” Gapstone Managing Partner John McCormack said in a telephone interview today.

Buyers Walk

The bonds, seven-year notes sold in 2007, traded at 74.55 cents on the dollar to yield 21.09 percent on Oct. 5, according to the latest data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Fitch Ratings downgraded the debt two steps on Sept. 21 to CC, eight levels below investment grade, citing “continued uncertainty over the willingness and ability” of buyers to take possession of apartment units.

Twenty buyers have walked away from down payments this year as the builder faced delays in finishing apartments, said Cinthya Ortega, an analyst with Fitch in Chicago.

“The biggest challenge right now is for them to make the first bond payment,” Ortega said in a telephone interview. “If they can collect on time, no problem, but the question is whether they will get those funds before Nov. 15.”

Donald Trump, speaking at the property’s opening ceremony on July 6, said he plans to build more hotels in the region.

“I see this as a great springboard to the rest of Latin America,” Trump said in an interview. “There’s strong interest in the Trump brand there.”