News

The developer of the Trump Ocean Club continues to struggle to pay its debt, which was revealed in Bloomberg’s Jan. 6 article headlined, “Trump Panama Hotel Developer Misses $23 Million Bond Payment.” While the headline sounds scary, this prearranged default on the payment has created unique opportunities for home buyers and investors willing to take the time to find out what is really happening behind the scenes.

Newland Properties, the developer, reportedly has been selling apartments at an increased pace in order to raise capital, which is keeping prices at the Trump artificially low. That means there are deals to be found, if investors know where to look.

But first, to be clear, the problems at the Trump Ocean Club Resort are with Newland, the developer, not the day to day operations of the Trump, which has grown into the centerpiece of Punta Pacifica. The opening of the casino in the fall and the completion of many of the amenities were vivid signs that the Trump is moving forward and assuming its role as Panama City’s top tower.

But Newland’s bond problems are complicated. Earlier this month, Newland missed a $23.4 payment on more than $200 million in debt due to mature in 2017, as it tries to dig out of the financial hole created during construction. However, the issues with Newland don’t directly impact the daily operations of the Trump in any way.

“We are very proud of being the number one performing hotel in the city,” Eric Trump, executive vice president of development and acquisitions at Trump Organization, told Bloomberg.

But here is the key news for real estate investors – “Since restructuring, the company has discounted prices in order to sell individual condo units, and executed two bulk sales at even larger discounts,” Fitch Ratings reported in August.

Newland has about 120 residential units and 202 hotel units in its inventory, according to a recent report by Redd, the research company. The fate of these units remains to be seen, as Newland continues to rework its debt deal. Newland and the debt holders reportedly want more breathing room to make the pending payment.

This has created an unusual situation – which can translate as an opportunity for savvy buyers. Newland’s situation has kept sale prices on Trump falsely low. We see demand picking up around the city, especially for quality apartments, but the temporary supply is keeping prices at historic lows in the Trump.

Newland’s debt holders apparently want Newland to have more room to maneuver and sell the majority of the remaining apartments for higher prices later in 2015 with just a few discounted units to be released now.

“This situation won’t last long as our phone call inquiries for Trump Ocean Club sales have more than quadrupled in the past week since the article’s release,” says Jeff Barton, Managing Director of Punta Pacifica Realty. “The market will eventually gobble up the supply and prices won’t be this affordable again.”

At Punta Pacifica Realty, we pride ourselves on our in-depth knowledge of the Trump. Jeff, the former sales manager of the Trump, recently wrote an excellent series of articles about the Trump and the nuances of buying, selling and renting in the building, including a report on the state of the market in the Trump, which can be found here.

If you have any questions about the status of the Trump or the latest news, please feel free to contact me directly.

Duncan McGowan is president of Punta Pacifica Realty, a Panama real estate agency focused on Punta Pacifica, the exclusive neighborhood of 18 towers perched on the edge of the Pacific Ocean.