Paulson, others could lose millions in Puerto Rico real estate bets

Storm damage hurts hedge funds’ profits

Oct.October 09, 2017 06:00 PM

La Concha Renaissance San Juan Resort (Credit: Marriott)

Deep-pocketed investors like Paulson & Company, Lone Star Funds and the Blackstone Group pumped hundreds of millions of dollars into Puerto Rico real estate in recent years. In hindsight, that doesn’t look like such a great idea.

The island’s economy is in tatters in the wake of Hurricane Maria. Storm damages could add up to $95 billion, according to one estimate.

“We sustained a lot of damage, and we’re facing very significant losses,” Brian Tenenbaum of the Morgan Reed Group, a major office landlord, told the New York Times.

Hedge funder John Paulson, famous for betting against the U.S. housing market in 2007, flew to Puerto Rico on his company’s private jet days after the storm to inspect the damage. Two of the company’s hotels were slightly damaged. A third shut down for now. In a statement the firm said it looks “forward to welcoming guests as early as the winter season.”

CPG Real Estate had to charter a private plane carrying canned goods, diapers and batteries to open part of an outdoor shopping mall in San Juan.

Some investors see light at the end of the tunnel: federal funding. “I think a lot of money will be spent fixing Puerto Rico, and that should be better for everyone,” Marc Lasry, of Hedge Fund Avenue Capital Group, told the Times. [NYT]Konrad Putzier 

Related Articles

(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

RedSky Capital’s Benjamin Bernstein and 1 Java Street in Greenpoint (Credit: ICSC and Google Maps)

RedSky puts Greenpoint dev site on market asking $165M

56 Leonard Street and 146 West 57th Street (Credit: Fruitpunchline via Wikipedia; Google Maps)

For second week, Manhattan records just two luxury contracts

Airbnb CEO Brian Chesky (Chesky by Bryan Bedder/Getty Images for Airbnb)

Airbnb raises $1B from private equity firms

Absent federal assistance, landlords and real estate developers are at the mercy of their lenders. (Credit: iStock)

Landlords locked out of $350B Paycheck Protection Program

46 Cook Street in Brooklyn (Credit: Google Maps)

Williamsburg biz takes 53% more space to meet demand