Gran Venetian - More Problems

There are three major condominium projects just north of the Hotel Zone - The Peninsula, Gran Venetian and ICON Vallarta.

Each of these problems is a proposed 3 tower complex.

Each is beset with problems. ICON is the most flexible in dealing with projects because nothing has really been built yet.

Gran Venetian has had to suspend construction of its third tower. You pick the reason - an injunction brought forcing the tower to be built as a hotel rather than condos, poor sales, no financing, a re-structuring of the entire project. It doesn't matter. This project will eventually go into work-out status. The problem is that the Mexican market has very little experience with this type of work out. Actually, we have never seen a work-out created as a result of a legal requirement to change an escritorio (a declaration) to allow the development of a hotel instead of condos, anywhere.

This is a unique project for us to review. Because, while we are recommending a sell status for existing owners, we are not sure it is possible to divest of an investment in this project due to the issues surrounding the escritorio. As a result, it may be better for an owner who is actually residing in the completed tower(s) to hold their investment.

Again, we stress that individual owners have unique financial profiles, and our comments are general in nature only. Specific investment advice should be sought before decisions are made.