Billionaire Paulson Said in Talks to Buy Puerto Rico ResortSarah Mulholland and Stephanie Ruhle
Paulson & Co.,the hedge-fund firm founded by billionaire John Paulson, is in talks to buy a resort complex in Puerto Rico.
Paulson & Co. is seeking to acquire La Concha Resort and the Condado Vanderbilt, neighboring beachfront hotels in the capital city of San Juan, according to two people with knowledge of the transaction. The firm will pay about $200 million for the properties, in which the territory’s Government Development Bank owns a stake, said the people, who asked not to be named because the deal hasn’t been completed.
Paulson, 58, is expanding investments on the island as the commonwealth and its agencies wrestle with a $72 billion debt load. Its economy has shrunk 14 percent since 2006 and the population has declined every year since 2005. The New York-based firm, which took a stake in the St. Regis Bahia Beach Resort and the Bahia Beach Resort & Golf Club in September, plans to invest $1 billion in Puerto Rican projects over the next two years, according to island officials.
Paulson & Co. “continues to negotiate different opportunities in Puerto Rico,” Alberto Baco Bague, Secretary of Economic Development and Commerce, said during webcast last week with bondholders hosted by the Government Development Bank. “These commitments are over $1 billion, half a billion in 2014 and half a billion in 2015.”
At the time of the prior hotel purchase, Paulson said the firm was interested in buying more real estate, citing the island’s popularity as a tourist and retirement destination and a local economy poised for growth after years of stagnation. He’s also the largest investor in the biggest bank, Popular Inc., and last year weighed moving to Puerto Rico to reduce his taxes.
Armel Leslie, a spokesman for Paulson & Co. with WalekPeppercomm, and Barbara Morgan, spokeswoman for Puerto Rico’s Government Development Bank declined to comment.
The La Concha Resort and the Condado Vanderbilt underwent an overhaul that started in 2004, which included the construction of towers designed also to be condominiums. The project was valued at about $450 million in October 2009, according to a statement from the GDB.
The unveiling of the refurbished properties, which were shuttered in the 1990s, was delayed as funding ran out. The Condado Vanderbilt, built on land acquired by Frederick William Vanderbilt in 1919, was partially opened in October 2012, though the adjacent towers remained closed. The La Concha, which houses the Casino Del Mar, reopened in December 2007.
The hotels are located on Ashford Avenue in the San Juan’s Condado district, a ritzy corner of the island. The street is lined with shops including Louis Vuitton, Salvatore Ferragamo, Gucci and Cartier, according to the Condado Vanderbilt’s website.
Paulson is best known for making $15 billion betting against subprime mortgages as the financial crisis hit. He considered a move to Puerto Rico to take advantage of a new law that would eliminate taxes on his gains from money he has invested in his own hedge funds, four people who had spoken to him said in March. Less than a week later he said he had no plans to move there “in light of the media attention” surrounding his possible relocation.
Puerto Rico is seeking to attract investment as it attempts to rebuild its economy after years of contraction. The three biggest ratings companies cut the island’s credit ranking to junk this month.