Cue one of the largest U.S. hedge funds. Paulson & Co, led by John Paulson, has added the San Juan Beach Hotel in Condado for $20 million, with plans to renovate the property.
The 96-room hotel filed for bankruptcy earlier this year, listing a debt of nearly $1 million in room taxes to the Puerto Rico Tourism Co.
Puerto Rico isn't new to Paulson, who, as Bloomberg reports, called Puerto Rico the "Singapore of the Caribbean" last year at an investment summit. His hedge fund owns other properties there including the Condado Vanderbilt, the St. Regis Bahia Beach Resort and La Concha Resort.
According to the Department of Commerce and Economic Development, Paulson's investments in Puerto Rico are expected to total as much as $2 billion by the end of the year.
He's not the only one betting on Puerto Rico's comeback. A troika of Aimbridge Hospitality, one of nation's top management companies, private equity and investment banking firm León, Mayer & Co., and alternative asset manager Fundamental Advisors, has bought the 387-room El San Juan Resort & Casino in San Juan from Blackstone Group. The New York Times is reporting that the purchase price was $71 million. The property is nearby another Aimbridge-run hotel, San Juan Water Beach Club Hotel.
As the Dallas Business Journal reports, Aimbridge has hired designers to overhaul and remodel the resort. Construction is forecasted to take a year.
“The hotel has lost of a lot of its luster over the past six to eight years,” Aimbridge CEO Dave Johnson told the Dallas Morning News. “Our plan is to put up to $35 million into the asset and restore it to be the crown jewel of what it used to be.”
Fundamental might not be done in Puerto Rico. It's reportedly looking at two additional opportunities in the area, Johnson said.
Wall Street is betting that Puerto Rico will climb out of its economic quagmire. As The New York Times reports, over the last few years, firms like Appaloosa Management, BlueMountain Capital Management and Och-Ziff Capital Management rushed into the island, placing bets on real estate. But things eventually soured. Last month, Gov. Alejandro García Padilla said that Puerto Rico could not pay all of its $72 billion debt, an announcement that sent investors into a tizzy.
“Puerto Rico is certainly in a trough,” Laurence Gottlieb, CEO of Fundamental Advisors, told NYT. “We are not at all blind to the fact that other hotels are feeling pain. It comes with the territory.”
The Times further reports that the Puerto Rico government is “actively courting other foreign investors, too.”
“Attracting savvy investors like Paulson and growing the tourism sector are important components of the administration’s economic development plan,” Alberto Bacó Bagué, secretary of commerce and economic development, said in a statement on Thursday.