Update on Naos Harbor Island Project

By DON WINNER for Panama-Guide.com - The Naos Harbor Island project is alive and well, and slowly making progress towards complete realization. This article will lay out exactly what happened, how things got slowed down and why, and what is now being done to move forward. The developers of the Naos Harbor Island project originally obtained their permissions, permits, and concessions during the administration of former Panamanian president Mireya Moscoso (1999 - 2004.) As you probably already know, in Panama there are basically two "sides" politically speaking - the PRD and everyone else. In 2004 former Panamanian president Martin Torrijos was elected (2004 - 2009) and about halfway through his administration the Naos Harbor Island developers started running into all kinds of roadblocks that were being thrown in front of them by the different elements of the PRD administration. Specifically and most importantly, the developers needed a concession from the government that would allow them to obtain title on the improvements that were being built on the island. Granted - the land under the buildings would always be owned by the government - however if you don't hold title to the improvements then it's impossible to obtain a loan or a mortgage on those properties. The developers poured millions of dollars into the complicated construction project, which involved blasting operations right next ships passing through the operating Panama Canal. The sad truth of the matter is that the former Comptroller of the Republic was holding the project "hostage." Without the full concession, and without the ability to get bank loans to continue construction, they knew eventually the developers would be forced to "play ball" - meaning, pay bribes. However, the developers refused based on fundamental ethics and sound business principles. Things came to a head and a standstill, Over time the developer eventually ran out of funds, progress on the project came to a virtual halt, and investors started to get very nervous over the lack of progress. (more)

PRD Out - Ricardo Martinelli In: In effect, the developers of the Naos Harbor Island project were able to tread water and wait until the PRD went away. In July 2009 Ricardo Martinelli was elected as the new President of Panama. In January 2010 the new Comptroller of the Republic took over (appointed by Martinelli) and the concession to allow for the titling of the improvements built as part of the Naos Harbor Island project was signed within 20 days. All roadblocks were effectively removed. The government also renegotiated payment schedules to give the company some relief and breathing space, to give them a chance to get back on their feet and moving again. That was the first step.

Getting Past The Liquidity Hurdles: It's important to note that having a piece of paper from the government that says you can legally obtain title - and actually holding that title - are two different things. No bank in Panama, or the world for that matter, would finance a loan or put money into the project until that title was granted. Have you ever tried to get a title on anything in Panama? If so, then you know it's a long and arduous process even when you have a friendly government in power. Right now the developers of the Naos Harbor Island project are putting the finishing touches on these procedures in order to have the titles issued. This project and all of the hurdles thrown in front of them by the previous administration basically drained all of the liquidity from the company. They used ever asset at their disposal, including what they call the "family patrimony" to keep the project on its feet. And all of these problems were caused by one very simple fact - a lack of liquidity. And now, fortunately, these problems are about to slide into the past as history.

With Title - Loans Forthcoming: With titles in hand, banks and international investors are now showing interest in the Naos Harbor Island project once again. No bank will grant you a loan on anything if they feel like there's nothing they can foreclose if you don't pay. Once you have title - then that's what gives them a degree of confidence that there is something "real" about your real estate project. The three residential towers of the Naos Harbor Island project are only the first Phase. The original plans have always called for a five star hotel, casino, shops and commercial spaces, and other amenities and facilities. In short, when you have money, you can do anything.

Nervous Investors Now Relaxing A Little: The original investors in the Naos Harbor Island project - those who bought apartments in the original three residential towers - can relax. Of course the project was originally supposed to have been completed a long time ago but in fact the roadblocks and delays were caused by factors beyond the developer's control. Again, that's all history. The project is moving forward in a fundamentally solid manner.

If It Wasn't Real - I Wouldn't Be Here: Guys, I have regular meetings with the developers of this project. I've been working with and for them for about a year now. I've sat in meetings with them and their lawyers as they have worked through many of these issues. They have been very honest, open, and straightforward with me. I've been relatively "quiet" about the Naos Harbor Island project in the past few months because I've been patiently waiting for the last few technical issues to be worked out, for paperwork to process, for permits and permissions to be granted, for titles to be issued, and for loans to come through. Rather than talking about each and every little movement of progress, I wanted to issue this overview with the bigger picture. The bottom line is that the Naos Harbor Island project is alive and well. And, once again, this simple fact is due in no small part to the fundamentally sound morals and ethics of the developers. If they were not the "real deal" then I would not be helping them through this process. Many others, who don't have the same solid foundations, would have simply bailed out a long time ago and screwed over the investors. These guys did and are still doing the right thing. And for that they should be applauded. The bottom line in all of this has not changed one bit from the day I first became involved. It all comes down to one word. Patience.

Copyright 2010 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.