Punta Esmeralda

Punta Esmeralda is a 20 acre project of villas, townhouses and condominiums north of Puerto Vallarta, between Bucerias and La Cruz.

The location offers many natural attractions but is about 45 minutes from downtown Puerto Vallarta, longer during peak periods. Road and commerical infrastructure, including stores etc. is very weak in the area.

The project is mostly completed with some condominiums in 2 low rise buildings (6 stories)available along with very expensive villas and town homes. Delivery risk is low. Homes will be completed and delivered when promised.

The developer, Real del Mar, is offering both discounts from list price and financing options, usually combined. The developer may be open to flexible financing and discounts. Financing risk is normal and can be reduced to low depending on the financing package selected.

Environmental risk is lower than normal for Banderas Bay. The project is well above sea level.

The projected maintenance fees of $370 per unit for the condominiums appear to have been set very low. This project has considerable common areas and facilities.

There is no formal rental program but the developer will assist with rentals in the short term. This project will likely generate very limited rental income.

The entry level price for an 1,800 sq ft. condominium is about $345M after discounts. We believe that prices will be very soft for the entire market area north of Puerto Vallarta, and this project falls into that area. There are well over 2,000 units presently available in that market area which is a pipeline of about 4 years supply. There will be no price appreciation in the short term (out to 12 months), and it is unlikely there will be price appreciation out to 3 years.

Recommendations*

Existing Owners: Hold

*Recommendations are general in nature only and will be impacted by investors specific circumstances.