Panama Investor Blog

Quarterly report shows continued success for Trump Ocean Club

I was pleased to read the latest report from the Trump Ocean Club titled, Quarterly conference call for investor. The project continues to make great progress in sales and construction, now reaching 94% sold.

Some highlights: • Sales from January to September 2009 amounted to US$ 27.7 million (an average of US$ 3.1 million per month). Management expects sales of approximately US$ 14.2 million for the last quarter of 2009.As a result, total sales for 2009 will reach approximately US$ 41.9 million.

• During the nine months of 2009, eligible receivables had a reduction of US$ 5.5 million. The sales figures in the nine month period generated enough receivables to offset the reduction in this asset
resulting from the successful performance of collections. As a consequence, the collateralization ratio was maintained above the 1.25x level.

• Collections from January to September 2009 amounted to US$ 29.2 million, providing enough funds to cover working capital needs, to replenish the Debt Service Reserve Account by June 2009 and to pay the coupon in November 15th, 2009 mostly from the Collection Account. Management expects collections for the last quarter 2009 of approximately US$ 6.8 million, including those derived from the accelerated payment discount program. This level of cash will allow the Company to fully replenish the DSRA by January 2010 thus having enough funds to cover the May 2010 coupon and also to cover
working capital needs.

• The Company’s liquidity position as per September 2009 is strong with US$ 92.5 million in restricted cash and deposited mainly in the Construction Escrow Account, the Collection Account and the DSRA. 

• The construction of the building (financed with the 2014 notes) continues at good pace. The date for the completion of the concrete structure continues to be March 2010 and the work in technical systems and finishes is currently in the level 35. The completion of the building is planned for August 2010 with delivery of certain units before this date.

• As of October 31st, 2009, the Cost Performance Indicator slightly improved as labor force productivity corresponding to the concrete structure increased. Management expects that the cost deviation over the original plan will be offset with savings arising from negotiations of finishes, technical systems and more improvements in work force productivity.

• As stated in the Independent Engineer’s Report issued on October 31st, 2009, the project specifications have been successfully maintained.

• The project’s safety record remains within the best standards.

Download TrumpOceanClub3rdQuarterReport.

IRS penalties for noncompliance

An article in International Properties caught my eye because it listed the penalties for noncompliance in reporting bank accounts, corporations and other structures by U.S. citizens. I like the way each noncompliance starts out as "A penalty for failing to file the Form XXXX". Thought my U.S. readers might want to know what the slaveholders will do to you should they discover you forgot to inform them of all your holdings. You can read the whole article here.

A short summary of some of the compliance requirements:

• A penalty for failing to file the Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an “FBAR”). U.S. citizens, residents and certain other persons must annually report their direct or indirect financial interest in, or signature authority (or other authority that is comparable to signature authority) over a financial account that is maintained with a financial institution located in a foreign country if, for any calendar year, the aggregate value of all foreign accounts exceeded $10,000 at any time during the year. Generally, the civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 or 50 percent of the total balance of the foreign account. Non-willful violations are subject to a civil penalty of not more than $10,000 for each account and for each year that the account is unreported.
• A penalty for failing to file Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Taxpayers must also report various transactions involving foreign trusts, including creation of a foreign trust by a U.S. person, transfers of property from a U.S. person to a foreign trust and receipt of distributions from foreign trusts. This return also reports the receipt by U.S. persons of gifts from foreign entities. The penalty for failing to file each one of these information returns, or for filing an incomplete return, is 35 percent of the gross reportable amount, except for returns reporting gifts, where the penalty is five percent of the gift per month, up to a maximum penalty of 25 percent of the gift.
• A penalty for failing to file Form 3520-A, Information Return of Foreign Trust With a U.S. Owner. Taxpayers must also report ownership interests in foreign trusts, by U.S. persons with various interests in and powers over those trusts under section 6048(b).The penalty for failing to file each one of these information returns or for filing an incomplete return, is five percent of the gross value of trust assets determined to be owned by the U.S. person.
• A penalty for failing to file Form 5471, Information Return of U.S. Person with Respect to Certain Foreign Corporations. Certain U.S. persons who are officers, directors or shareholders in certain foreign corporations (including International Business Corporations) are required to report information. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.
• A penalty for failing to file Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation. Taxpayers are required to report transfers of property to foreign corporations and other information. The penalty for failing to file each one of these information returns is ten percent of the value of the property transferred, up to a maximum of $100,000 per return, with no limit if the failure to report the transfer was intentional.
• A penalty for failing to file Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. U.S. persons with certain interests in foreign partnerships use this form to report interests in and transactions of the foreign partnerships, transfers of property to the foreign partnerships, and acquisitions, dispositions and changes in foreign partnership interests. Penalties include $10,000 for failure to file each return, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return, and 10 percent of the value of any transferred property that is not reported, subject to a $100,000 limit.

Banco General awarded "Best Bank in Panama in 2009

The financial magazine LatinFinance General Bank awarded "Best Bank in Panama in 2009" in its latest edition of the Bank of the Year awards, results published in the November issue and on its website www.latinfinance.com.

To choose the best banks in each country, the magazine takes into account, among other variables, path consisting of the results and demonstrated capacity for growth and innovation.

Panama, among the best according to Financial Task Force (FATF)

According to an article in La Prensa, Panama is rated just behind the U.S. in compliance with money laundering regulations.

The enforcement staff report conducted by the Financial Action Task Force (FATF), based on a review of compliance with its 40 recommendations for the prevention of money laundering, plus nine special recommendations on terrorist financing, remains to Panama between top with best rating.

  The report, which summarizes the evaluations of FATF since 2005 and is updated the first quarter of 2009, noted that Panama stands fourth in the list of 44 countries and jurisdictions participating in the evaluation, with only below States USA, Singapore and Belgium, reports the Superintendency of Banks.

 From the list of the 40 +9 recommendations evaluated, Panama met in full and largely 39 and partly with nine of the recommendations specified by the FATF for the prevention of money laundering and terrorist financing.

 The FATF is an intergovernmental body whose purpose is to develop and promote measures to combat money laundering and terrorist financing.

Great advice for buyers and developers from Donald Trump Jr.

The son is a lot more down to earth than his father in these difficult times for developers. From International Property Journal.

In an interview with CityscapeConnect, Donald Trump, Jr., the executive v.p. of development and acquisition for his father’s company, wanted to make it clear he’s “not necessarily the spoiled brat that many people would love to envision me as.”

Once he cleared that up, Heir Trump focused on business and he wasn’t painting the same rosy pictures favored by his perpetually cheerleading father.

For buyers, his negotiating advice was to make an offer. “You don’t get anything you don’t ask for,” Trump, Jr. said. “Try for it, you’ll probably get it.”

Trump urged developers to grasp a better understanding of the reality of the market. “The days of thinking you’re going to sell average building sell outs at $3,000-plus a square foot anywhere is over,” he said. “It doesn’t exist anymore.”

Developers need to stop “trying to squeeze blood out of a rock” and make deals, he said. “It’s more important to make deals and create velocity.”

New U.S. tax on cosmetic surgery may drive more business to Panama

They will have to tax a lot more than just elective cosmetic surgery in order to pay down the debts being incurred, but at least it may help Panama. Come on down!

From Russia today

Desperately seeking money to pay for new health care legislation, Senate majority leader Harry Reid is proposing a 5 percent tax on elective cosmetic surgery and procedures.

With all the nipping and tucking and lifting and botoxing that members of Congress have recently indulged in, it's difficult to imagine that he will find much support. Nevertheless, some senators who have already had their fill of fillers and thus feel free to tax the sagging and wrinkly laggards, need to consider the following.

Cost of canal to go to $375 million

100 years ago this came out in the papers in America. What I find most interesting is the estimated cost of construction.

An upbeat annual report by the Isthmian Canal Commission was released yesterday by the War Department, and included an explanation for the increase in the project’s estimated cost, to about $375 million from $144 million. “Prosperous conditions in the United States, combined with the unsavory reputation that the Isthmus had regarding its healthfulness, made it necessary, in order to secure labor, to increase the wage scales from 30 to 60 per cent over those paid in the United States for similar classes of work,” the Chief Engineer, George W. Goethals, wrote. “Certain gratuities, as additional inducements, were also offered, which in the main have since been continued. Moreover, the provisions of the eight-hour law were made applicable to the isthmus.” Canal Report Shows Good Progress Made; Col. Goethals’s Summing Up of Year’s Work at Panama Published by War Department; Explains Increase in Cost; Subsistence Department Runs 17 Hotels — 12 Schools for White Children and 17 for Colored Maintained..

Download Canal cost increase

Lets go flying

I know many of my readers are flying enthusiasts like myself so I wanted to share information about a fascinating aircraft I have been watching for some time come to fruition. Imagine a craft that lands on both land and water and can be easily trailered. Besides incredible function the plane is just plane cool. I have a deposit on one which may be delivered in 2011-12. Go to the ICON website for more info.

Sam's tips on residential project marketing

 This post is part important marketing information and part shameless self promotion, both of my genius at web design, copy-writing and marketing and to get your eyeballs on my projects new website.

I have struggled over the years with getting websites built in a timely and cost effective fashion. I have great guys with talent to do the work, but I still have to provide the content which is a very time consuming job in itself. I then have to contact them for every little change I want to make and it takes them time to get to it and additional costs. I have tried different programs to let me build a website myself, but all were too complicated and the end product never looked very good. Besides, I am usually too busy as a project developer to spend time learning web design.

So, the other day my hosting service sent me an email about a new program that would allow me to Drag and Drop all the elements onto a page while online and publish it with a press of a button, very similar to how I post this blog. I did not have to know HTML or FTP, SWF or anything more than I do when blogging.  It really is web site design for dummies. I built the site in about 12 hours, start to publish! Now, I don't have a dog in this hunt and won't make a dime if you end up using this program, but it is so cool that I wanted to share it with you and get some publicity at the same time.

Now for some helpful info if you have a development project you want to promote.

If you will take the time to look over the site there is a marketing theme that I have used throughout the site that development promoters may want to take notice of. In my first page I am trying to connect with my potential client by conveying specific information about the quality of the project, its amenities and access to THINGS. Access to THINGS is extremely important to WOMEN who plan on living any length of time in the property. And guess what, it is women that you must convince to buy in your project. After over 175 sales I know for a fact that it is usually the men who have done the research and want to move to Panama, but it is the women who makes the final decision on where they will settle. As a side note, there are a number of single or widowed women living in Valle Escondido which greatly surprised and pleased me. For a women to pick up stakes and move to a foreign land tells you something about her and the project. She is extremely independent and the project makes her secure and happy enough to go it alone.

I go on to tell about the people who inhabit our piece of paradise so they can connect and feel that they could fit in. I provide some information on the activities and amenities beyond our gates so they can see that there is more to do than just be in this project. There is a residents testimonial page which is extremely important. Just as TravelAdvisor testimonials can make or break your lodging business, great testimonials can really help people connect with your project.

The second page goes into my story of why I selected and built Valle Escondido. I call it the "safe haven" story. Just about every MAN who comes through our sales doors say they connect with it, because they too are looking for a safe haven. Think of it like this. Men are always seeking safety for their ass and their assets and women are thinking  more about comfort and knowing there are others like them to connect with. Nothing new here, so if you apply that line of thinking into your marketing you may have similar success.

Then there are details on all aspects of the projects amenities such as HEALTH AND BEAUTY SPA, fitness center etc.. Most things catering to women. And then there are lots of photos. Of course I have the benefit of the project being nearly completed and do not have to resort to computer renderings, but also the handicap of little else to sell. But,  I don't really care because I want to retire and enjoy the fruits of my labor and my wife wants to work and run the business as she has for the past 5 years. A happy wife is a busy wife I always say. I will hopefully live my life as do the other 350 or so folks that live in Valle Escondido, enjoying the third age as they now call it.

The site really was built in 12 hours, which I think is very fast when you consider I am the copywriter and had to hunt down all the photos out of the many thousands in my files. Not to mention my first time using the program. You can go here to view my site and here to find out more about the program. They let you use it free to a certain level and then it is $10 a month. Cheap IMO. Please feel free to comment on my work as I can surely use some feedback. Don't worry about hurting my feelings, after cancer treatment I am impervious to pain!

Tax (in)Justice Network says Panama is "a grubby little tax haven"

Several U.S. advocacy groups are climbing on the band wagon to try force Panama to become more compliant in their tax information exchange.  The have names such as "Tax Justice Network" and "Public Citizen", names which would indicate they are advocates for freedom. What they really have in mind is enslavement of the populace by eliminating any option one might have to protect his/her wealth from the greedy politicians and tort lawyers who support them.  They are really working for the state under the guise of working in your best interest!

The Tax Justice Network is an organization that is closely aligned with the anti-tax haven ideals of the OECD except they see the OECD as hypocritical due the the fact that several member countries are the largest tax havens in the world with the U.S. and Great Britain leading the way. They want tax justice for the state, certainly not for the individual. They don't like tax competition and firmly believe that taxes should be universal and high. Here is how they see themselves: The Tax Justice Network (TJN) is an international, non-aligned coalition of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens. www.taxjustice.net

Now they have focus on Panama because of the possible trade agreement with the U.S..

Here is an excerpt from their story; “While some offshore jurisdictions around the world have said they will no longer use bank secrecy to help tax cheats, Panama apparently still refuses to negotiate a tax information exchange agreement with the United States. We should not reward Panama with a free trade agreement unless and until it agrees to disclose information on U.S. tax dodgers,” said Sen. Levin."

Public Citizen has also come out with an attack on Panama with this supposed report titled "Panama FTA Would Undermine  U.S. Efforts to Stop Offshore Tax-Haven Abuse and Regulate Risky Financial Conduct " You can download this PDF report here.