Dear All
I am pleased to inform you that I went over to Madrid with three investors in Punta Perla and met with the development company again on Tuesday 14th July. The three who came with me had been selected to meet with various representatives and the president of the development company personally and I feel represent a fair cross section of PP buyers. Each of the investors had prepared a quite an extensive list of questions but the underlying messages were:-
- What's with the delays?
- When will my property get built?
- Is this a scam?
- Evidence of ownership of the land
- Evidence of build permits and the Confotur
- Will we get a mortgage when the properties are ready?
- Why has communication from the developer's office been so poor?
The meeting lasted for over 6 hours but here is my summary:-
First of all, allow me to explain the background and reasons for the delays which I hope will illustrate to you all why clients are still waiting for properties. I have to be very careful how I write this so as not to compromise the relationship with the Dominican Government, so I hope you understand if I cannot go into too much detail.
I would also like to add that the development company is not just one person and like many companies is made up of an executive board of investors and professionals. Ricardo Miranda just happens to be the President and CEO and like most companies is not the sole decision maker. When significant decisions are made, the board meets, discusses them and then decides which course of action to take just like any other company.
There have been a number of false statements and blatant lies written in a number of newspaper articles and published on various blog sites trying to damage the good name of the Development Company and Punta Perla. These people who are actively trying to destroy our fabulous project will be found out and made criminally responsible for their actions. So as not to perpetuate a tit for tat situation with the newspapers, which would benefit nobody, the development company has not insisted on a public retraction of these articles, rather try and forge a healthy relationship which will work for the better of the project as a whole.
As for the blog sites, it is possible to trace IP addresses and therefore indicate the likely authors of malicious lies and allegations, so those people should be very aware of the legal recourse which the development company is prepared to and will take.
When some of us initially purchased our properties back in 2006 the development company had bought the land outright which comprised of some 81 smaller lots which now form part of the 10 million square metres of Punta Perla. There is not any mortgage, lien or encumbrance of any type on the land which the development company owns outright. We all witnessed the copy of the land title and were duly satisfied as to its authenticity. We were able to see all the different licensing documents of all the varying government departments, particularly those of land title, building permits, and the Confotur, officially issued by the various departments. The development company welcomes any client or clients´ solicitor to visit or consult with their solicitors offices in the DR to confirm and certify this point. If there remains any doubt (although it is ludicrous to think that the President himself and many other government officials would have been present in the groundbreaking ceremony were all the paperwork not in place) then you are free to fly to the DR and inspect the originals.
Delays
Quite clearly there have been significant delays, which have stopped the project from really getting off the ground from a construction point of view. These delays were purely bureaucratic and in no way could have been avoided by the development company. It is impossible to go into much detail regarding the delays as we would not wish to embarrass any parties who could be of significant assistance in driving the project forward in the future. All of us were satisfied that the explanation given for the delays was accurate and true and that in no way could the development company have avoided them without compromising the credibility and good name of this project. We were all assured that the development company had acted in the best interest of all parties who have invested in PP. Unfortunately because of the sensitive nature of the reasons behind the delays it has been impossible to explain why we had to endure the delays without creating an unnecessary and embarrassing situation.
I am aware that we were given several deadlines and were subsequently let down on many occasions. There were numerous occasions when we were told that construction would get underway only to get let down. At the time there were no coherent, plausible reasons that Punta Perla would not get the Confotur or the final building permit. This was not the developer pulling the wool over anybody's eyes so much as him being let down time and time again when submitting the Confotur for its last meeting of approval. The three of us were able to see the letters which accompanied the project documents for the Confotur each time they were submitted, no less than 15 times over the 30 month period. On not one occasion did the development company get a response from the department to say that Punta Perla would not be approved at the meeting. The project document had been circulated and approved in the rest of the other government institutions, all passing it straight away, all aware of the significant benefit that PP would bring to their country. Punta Perla was only one of dozens projects which were held up for years in getting the Confotur and were prevented from constructing by the previous Minister of Tourism. Since then the department has restructured and Punta Perla Confotur and permit to build from the restructured Ministry of Tourism was issued straight away. This happened back in late October/early November last year.
Because the project was delayed by 2.5 years, clearly in the commercial world there have been many changes in terms of material costs/labour costs, legislation governing building laws, the environment etc, so it was not just a situation of getting the Confotur and instructing the constructors to deploy thousands of men on day one. The whole project had to be re-visited, re-planned, re-costed and re-scheduled which for a development the size of a medium sized UK town does not simply happen overnight.
Given that the delays were outside of the control of the development company, they do fall under the banner of "Force Majeur" which in the DR means for credible reasons outside of the control of either party which in this case the delays clearly were. I have requested a formal definition of "Force Majeur" according to DR law which I will be happy to share with those who wish to see it. None of us in the meeting are international property lawyers, experienced in the Dominican Republic, so we cannot say for sure that what we witnessed was 100% bona fide, but one of the development company´s principle legal advisors who sat in the room with us and who is a senior partner in one of Madrid's leading law firms would. The same lawyer also went on to explain that under international property law that land cannot be sold on legally without informing any "interested" parties and that the liability of those "interested" parties would transfer with the land, although absurd to think that in a project of this size, volume and value, the development company would contemplate such an action, resulting in a loss as opposed to a gain for the company.
Whilst all of the delays were happening the architects and planners were busy re-designing the new Marina which now promises to be the best Marina in the Caribbean and one of the best in the world. The sheer scale, grandeur of the design itself and extensive facilities of the new marina will positively impact the prices of all of our properties. Although re-designed, the Confotur and all building permits cover the new Marina, so we will have no more delays because of this.
During the course of the meeting, the development company confirmed that construction has now been underway on the Beach Club & Spa & Boutique hotel for nearly two months now and expects it to be completed and ready for occupation towards the end of the year. The Boutique hotel will be made up of 16 villas, which will be designed, constructed and finished in the same manner that we can all expect of our own properties. We were informed that construction on the Marina, Golf Course I and all of the properties in the first phase will commence at the end of the summer, completing in a maximum of 24 months.
Security
Two main questions prevailed regarding the security of the money we have all invested via deposits and the legitimacy of the rental guarantees. The money we have all invested thus far has been put to good use and not sat idle. First of all, some of it was used to purchase the land as well as design, plan and schedule the project. Some will be used to build out the project. Bearing in mind that the land purchase alone was over $400 million, the development company and other investors and board members injected over $300 million of their own cash. With all permits and Confotur in place, the land with all the permits and full project designed was valued about 12 months ago at somewhere between $3 billion and $3.5 billion. If at worst case because of the current economic climate it halved, its new value would still be over $1.5 billion. That is a huge unencumbered asset, making allegations of our money being frittered away absolutely absurd.
The rental guarantee is backed by GEXTUMARSA, which is a wholly owned subsidiary of the development company and is tasked to head up and bring in world class tour operators and agencies to market Punta Perla. Any liabilities held by Gextumarsa are equally held by the development company (so in other words it is not simply a "shell" company who could pack up and run away tomorrow).
I really think that it is very important that as fellow investors we dispel any rumours of PP being any kind of scam, it is not and has been delayed for reasons completely beyond our control. There are a number of investors who understandably are very frustrated and there are a very few who are so miffed that they are considering taking a class action against the developer. Now then I am not a lawyer or legal eagle and know even less about DR Law but I really struggle to see where the development company is actually in breach of his contract with us (fellow investor). The reason that I am saying this is to hopefully prevent anybody engaging into a legal battle which to me looks like throwing good money away. If they were to try and pursue the development company it would have to be in a Dominican court and would be likely to take 4-5 years during which time our properties would be built and rented out. Damaging the project at this stage would do no good other than line the pockets of solicitors who have very little else to do right now. My words are just my observation of the current situation and you really don't have to listen to me if you do not want to. Just do not let your anger for the delays and lack of information cloud your judgement on the reality of the situation now.
I hope this letter gives you a satisfactory snap shot of where we have come from, where we are now and the way forward.
Kind regards
Mark Andrew
Emerging Earth Ltd
