April 24, 2014

John Paulson Calls Puerto Rico Singapore of Caribbean




Billionaire hedge-fund managerJohn Paulson said today that Puerto Rico’s economy is at the beginning of a turnaround and predicted the island will become the Singapore of the Caribbean.

Paulson, speaking today at the 2014 Puerto Rico Investment Summit in San Juan, a conference designed to promote the territory and attract investors, said he’s building a home in the commonwealth. The hedge-fund manager, who last year considered relocating to Puerto Rico to take advantage of new tax laws, said opportunities to buy real estate in the region won’t last much longer, and he’s looking to purchase sites that can be developed to serve people he expects to move here because of the legislation.

“We are interested in future development opportunities,” said Paulson, 58, adding that what he builds will be higher-end than what currently exists on the island.

The $22.8 billion Paulson & Co. is adding to its investments as the commonwealth and its agencies wrestle with a $73 billion debt load and an economy that’s shrunk in five of the past seven fiscal years. The three biggest ratings companies cut the island’s credit ranking to junk earlier this year.

Different Opportunities

The New York-based firm, which took a stake in the St. Regis Bahia Beach Resort and the Bahia Beach Resort & Golf Club last 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 a webcast in February 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.”

In March, Paulson & Co. bought resort complex La Concha Resort and the Condado Vanderbilt, neighboring beachfront hotels in the capital city of San Juan for $260 million, including costs to complete construction of the Vanderbilt. He’s the largest investor in the biggest bank, Popular Inc. (BPOP), and according to a person with knowledge of the situation, owns Puerto Rico municipal bonds. Paulson’s new residence will be a vacation home at the St. Regis resort, said the person, who asked not be named because the information is private.

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 last year. He later said he decided against such a move.