Thread: Trump Ocean Club Panama - Investor Jitters?

According to the 2Q10 Newland Report on Trump Ocean Club, there have been 26 units classified as defaults and returned to inventory.

Can you see if that's quarterly number or not? How many units are in the building?

Originally Posted by Contrail

According to the 2Q10 Newland Report on Trump Ocean Club, there have been 26 units classified as defaults and returned to inventory.

I see now - 26 units returned over a 7 month period?

They have also made a bulk sale at $6.2 million for 27 units. That comes out to $229,629 per unit. Only question now is to figure out what type of units that is.

Originally Posted by EdBowers

Can you see if that's quarterly number or not? How many units are in the building?

Need to reference the actual report, I have only seen a news article so far.

Here is a report from Sept 2009:

http://primapanama.blogs.com/files/t...rterreport.pdf

As can be seen from page 6, the average price for the cheapest unit is around $400,000.

Trump has now sold 27 units (not known what type) at $229,000 a piece.

That's close to a 45 % drop in price.

3.71 units per month are being defaulted on without the building even being finished. If the pace holds up and it takes another 6 months to get an occupancy permit another 25 units should default at a minimum.

Any sensible "average" investor who knows basic math should walk when the final payment is due.

I think that six months is a trifle optimistic Ed, for moving in that is, of course you may be right in the sense that the 'occupancy' certificate is often issued months before the building is finished in the meaningful sense of the word.

As per the news section here: TRUMP OCEAN CLUB

It is well on course for a completion date of August 2010.

According to the Sept 30th 2009 quarterly report there were:

Residential condominium units:

One bedroom units 156 99.4% sold
Two bedroom units 200 72.5% sold
Three bedroom units 74 95.9% sold
Three bedroom combo units 13 92.3% sold
Penthouse units 1 100.0% sold
Curve units 65 55.4% sold
Bay lofts 126 74.6% sold

Subtotal 635

Hotel condominium units:


One bedroom suite units 10 80.0% sold
Curve units 39 51.3% sold
Studio units 320 100.0% sold


Sub total 369


Total Residential condominium and hotel units 1,004


Available residential and hotel inventory as per September 30th, 2009 includes 121
residential units and 21
hotel units.

Then there are the commercial units restaurants and offices.

"It is well on course for a completion date of August 2010."

Do they teach these kind of phrases at Realtor College?

Of course they still have to put in a marina or has that been nixed?

I have read that Panamas fire services can't handle a high rise fire. Their trucks, pumps and ladders are inadequate. Alaso the water pressure at hydrants is to low. How can they permit these high rises with no way to fight, contain, or rescue potential victims? I know some of you may be able to shed some light on this issue?

Buckets and helipad?

"How can they permit these high rises with no way to fight, contain, or rescue potential victims?"

$$$$$ Normally.

you guys are over the top!

Probably the best option if you are in the penthouse and there is a fire...

Well, the building is pretty close to the water. Maybe if you put a spring board on your balcony you might be safe?

To be practical - if you got stuck in your apartment, just make sure you have some climbing equipment that you know how to use. Abseiling would be a doddle.

They could always include a "complimentary" parachute?

For the sake of clarity, it is worth noting that the only person that is guaranteed to make a profit out of this is Mr Comb-Over himself. His financial involvement is restricted to leasing the 'Trump' Name to The K Group, the developers of the project. Whichever way it goes he is laughing all the way to the bank.

if there is any bank left he has not sued

The Antiguan branch of Stanford, probably not worth suing.

I will say I am interested to see how things turn out. It sounds like they had to drop some prices? If the casino/entertainment area does well then the apartments will probably get booked up. If the casino/entertainment area isn't all it is cracked up to be then, obviously, you own an expensive apartment. I will say the building is adding a unique look to the skyline of PC.

I agree in the general puffing involved in the Panama real estate market.

That said, here are some facts I have heard about the TOC building/project (plz verify for yourself).

The Trump Ocean Club is one of the few that will have a Florida style fire sprinkler system in all units. Also, the fire escapes have been mounted on the exterior of the building and hidden, which is an interesting design. No need to buy a parachute for each member of the family.

The bulk purchase is no longer available.
Investors that walk away from this point give up 30% in deposits.
The development of the project has already been paid for by the bondholders.

P.S. The rest of Punta Pacifica should still consider buying parachutes in case of a Towering Inferno, but Trump seems to have been planned out fairly well.

Exactly who is holding the bonds right now? I heard a massive part has been taken off the market.

How many do you think will walk away from the 30 %? Has everyone who signed a contract really paid 30 % already?

Are they allowed to add 5-10 % for cost increases to the final bill per the contracts?

Is there a single bank in Panama that will finance the remaining 70 % at a 400k contract when most recent developer sale was at 229k? I would guess the banks here would finance 50 % of the assessed value at this time. That's 229/2 = 115 out of 400k!!!

I'm not sure about the bonds being off the market? I'm not a bond expert, but I thought they were publicly traded? Someone else mentioned they are at 90-92 basis points right now. I think they went as low as 60pts 2 years ago? I could be wayy off on the bond quotes, but I know they recovered from their lows.

Yes, I believe everyone is at a minimum 30% deposit right now. That should give a cushion to the developer (bondholders) on defaults but will hurt buyers badly when they can't get financing.

I believe it's a 6% cost overrun for all buyers unless you negotiated something special. They say they don't plan to use that clause, but I have a hard time believing they will not. I know their cost overruns are running high.

I agree the financing will be tricky for sure.
I hear TOC is working to offer special financing with multiple banks that will finance their property. I'm not sure at what % down though.

Here are a couple of posts I made on another thread at the end of June this year concerning a realtor offering Trump units for sale:

"This unit offered for $239,000 is a Hotel unit. It is 49 m2 and on the 22nd floor with direct Ocean View. See attached photo showing the line for these units in the building and the floorplan

As an owner you can use it for up to 3 weeks per year.

The contract says that the developer can charge up to 8% extra for cost over-runs, which would be paid at closing.

The building is on scheule to be completed and the Hotel operational by March of 2011.

We anticipate that owners of the hotel units will enjoy a NET income of between $2500 and $3000 per month. This is based on the anticipated room rates of between $300 and $400 per night and occupacy rates of 70%.

If you wish to personally use your Trump unit for MORE than 3 weeks per year then we have another option for you. We are also selling a 65 m2 suite for $299,000, and you can either live there, or rent it out ( not part of the hotel program ).

So you have 2 options:

1. Hotel Unit, 49 m2, $239,000
2. 1 bedroom Suite, 65 m2, $299,000 "

---------------------------------------------------------------------------------------------------------------

According to the realtor:


"1. The cost overrun is limited to 6% and they have not decided how much of that to bill the owners yet.
2.$239,000 is the cheapest he has ever seen, it was the price in 2006 and TOC would want about $300,000 for one at the moment.
3.The price peaked at just over $400,000 at the end of 2008.
4. He reckons on a net income of $ 25,000 - $30,000 based on 70% occupancy at $300 per night.
5. Completion is planned for around February 2011.

Personally I am surprised that TOC could get away with keeping 60% of the rental income and not letting the owner occupy for more than three weeks a year. All you are really doing is lending TOC say $280,000 for a possible return of under ten percent if it gets completed and hotel occupancy rates go to plan... You also have the aggravation of buying and selling along with the sales commission and a probable depreciating asset. Nice business plan for TOC.
Must ask him if there are any hotel condo fees, property taxes and what is happening with the marina. "

I think that the chances of not charging purchasers 6% for cost overruns are about the same as completion in August 2010.

The monthly maintenance fees on an hotel unit are approx $200 per month apparently.

Originally Posted by Contrail

I think that the chances of not charging purchasers 6% for cost overruns are about the same as completion in August 2010.

The monthly maintenance fees on an hotel unit are approx $200 per month apparently.

Contrail, I read somewhere that after the 1st year when the developer relinquishes the administration of the condo building to a new management agency, the condo fees usually go up by as much as 25-50 %.

I think they are smoking dope if they think they can maintain 70% occupancy at $400 a night. Initially people will stay just because it is new. Sooner rather than later those occupancy rates will drop. Trust me people of means understand what is happening worldwide and are becoming more frugal. Tourism is likely to wane as the Worldwide Depression deepens and this means less heads in the beds. I understand Trump intends to his clientele to be wealthy business and celebrities. I question the timing and business price point . Your post is very informative and helpful, thanks.

Originally Posted by Contrail

Here are a couple of posts I made on another thread at the end of June this year concerning a realtor offering Trump units for sale:

"This unit offered for $239,000 is a Hotel unit. It is 49 m2 and on the 22nd floor with direct Ocean View. See attached photo showing the line for these units in the building and the floorplan

As an owner you can use it for up to 3 weeks per year.

The contract says that the developer can charge up to 8% extra for cost over-runs, which would be paid at closing.

The building is on scheule to be completed and the Hotel operational by March of 2011.

We anticipate that owners of the hotel units will enjoy a NET income of between $2500 and $3000 per month. This is based on the anticipated room rates of between $300 and $400 per night and occupacy rates of 70%.

If you wish to personally use your Trump unit for MORE than 3 weeks per year then we have another option for you. We are also selling a 65 m2 suite for $299,000, and you can either live there, or rent it out ( not part of the hotel program ).

So you have 2 options:

1. Hotel Unit, 49 m2, $239,000
2. 1 bedroom Suite, 65 m2, $299,000 "

---------------------------------------------------------------------------------------------------------------

According to the realtor:


"1. The cost overrun is limited to 6% and they have not decided how much of that to bill the owners yet.
2.$239,000 is the cheapest he has ever seen, it was the price in 2006 and TOC would want about $300,000 for one at the moment.
3.The price peaked at just over $400,000 at the end of 2008.
4. He reckons on a net income of $ 25,000 - $30,000 based on 70% occupancy at $300 per night.
5. Completion is planned for around February 2011.

Personally I am surprised that TOC could get away with keeping 60% of the rental income and not letting the owner occupy for more than three weeks a year. All you are really doing is lending TOC say $280,000 for a possible return of under ten percent if it gets completed and hotel occupancy rates go to plan... You also have the aggravation of buying and selling along with the sales commission and a probable depreciating asset. Nice business plan for TOC.
Must ask him if there are any hotel condo fees, property taxes and what is happening with the marina. "

The other consideration is the sheer volume of hotels / condo hotels on the horizon. According to the primapanama blog:

"Hotel occupancy in Panama has been on the decline and occupancy rates that were in the 80% plus has now dropped to the med 60% level. On top of this decline is another 10,000 plus hotel rooms coming on line over the next year or so. The Megapolis alone is 1500 rooms and it is one of several dozen hotel projects underway."

Panama Investor Blog

"Contrail, I read somewhere that after the 1st year when the developer relinquishes the administration of the condo building to a new management agency, the condo fees usually go up by as much as 25-50 %."

Not unlikely and if the developer is sitting on a shedload of unsold or defaulted units does he pay the maintenance fees as well or is that only proportioned out amongst owners?