Portofino Rosarito Residential Resort

Transcription

Condominium Development
PLAYAS DE ROSARITO
BAJA CALIFORNIA, MEXICO
Association proposal for a turnkey
development of a 100-unit condominium
resort project south of Rosarito, Baja
California, Mexico
An invitation to participate as an
investor, owner, or partner
Total funding to be placed:
$2,700,000 from private lenders
$1,000,000 from developer and builder
$300,000 from development group
Presented by
Baja Development Partners, LLC
A development venture between
Firm Residential & Baja Resort Advisors
BAJA DEVELOPMENT PARTNERS… BUILDING THE AMERICAN DREAM IN MEXICO
A 100-Unit Condominium Project to be Developed South of
Rosarito, Baja California
To Our Private Lender Partners:
We are pleased to announce a compelling development opportunity in Baja, California. The tremendous
demand for resort housing in northern Baja California has been spurred in part by important new laws that
allow foreign companies to develop real estate in Mexico. Firm Financial Corp., doing business as Firm
Residential, has invited Baja Resort Advisors, LLC, a La Jolla-based resort development firm, to
participate in the development a 100 unit luxury condominium project just north of world famous Puerto
Nuevo. The project’s operational entity is Baja Development Partners, LLC, (BDP) a California Limited
Liability Company.
The principals of BDP combine considerable skills and experience in real estate marketing, finance and
development. Chief among them is Gabriel V. Robles, president of Baja Resort Advisors. To his credit, Mr.
Robles has over 180 residential, resort and hospitality developments in Mexico and his participation
virtually assures a successful outcome. His current project, Ventana al Mar, a 611-acre, 2300-unit resort
development north of Ensenada, Baja California, is considered the crown jewel of developments along the
Baja “Gold Coast.” (www.ventanaalmar.com).
The Rosarito-Ensenada corridor is among the fastest growing real estate markets in North America. Many
beachfront condominiums along this Baja coastal stretch are experiencing 30% plus annual appreciation
rivaling the meteoric growth seen recently in southern California. National media attention has only fueled
the unprecedented investment activity in the area. As a result, virtually all major beachfront developments
are sold out entirely before construction is completed. By combining an incredible location in a booming
market with a proven developer, we are certain to attract a multitude of buyers to this stunning oceanfront
residential resort.
BDP is keenly aware that discriminating U.S. buyers demand institutional protections in order to feel
confident and secure in foreign real estate transactions. To that end, we have contracted one of the largest
U.S. title companies, Stewart Title of Houston, Texas, to guarantee clean title to the subject property.
Furthermore, we are partnering with numerous U.S. lending institutions including Bank of Laredo,
Collateral Mortgage, and a subsidiary of G.E Capital, WMC Direct, to provide long-term mortgages to U.S.
buyers.
We invite you to consider this unique opportunity to participate in the funding of this landmark
development and capitalize on the booming Baja California market with an astute, seasoned team of
professionals. Although the information contained herein should be sufficient to make an informed
decision, additional resources are available upon request should you desire further information.
We thank you for your interest and look forward to your participation. Should you have any questions,
please feel free to contact us.
Respectfully submitted, Baja Development Partners, LLC
Gabriel V. Robles
Brett C. Ward
Jerome R. Cleland
Baja Resort Advisors
President
Firm Residential
President
Firm Residential
Vice-President
Mark L. Allen
Garth N. Ward, Esq.
James B. Bogle
Firm Residential
Vice-President
Attorney at Law
Firm Residential
Vice-President
Table of Contents
Portofino Rosarito Residential Resort ..................................................................... 2
Financial Summary........................................................................................................ 4
Financing Strategy......................................................................................................... 5
Project Summary............................................................................................................ 6
Site Analysis and Area Description .......................................................................... 9
Subject Property............................................................................................................ 10
Infrastructure................................................................................................................. 10
Local Attractions & Entertainment............................................................................... 11
Climate.......................................................................................................................... 12
SITE PHOTOS, MAPS AND DOCUMENTATION ................................................... 13
Aerial Photograph of Project Site ................................................................................. 14
Location Maps .............................................................................................................. 15
Corredor 2000 ............................................................................................................... 16
Property Photographs.................................................................................................... 17
Plat Maps ...................................................................................................................... 19
Approval Letter for Development................................................................................. 20
Approval Letter for Development................................................................................. 21
OWNING PROPERTY IN MEXICO............................................................................. 23
Foreigner’s Right to Own ............................................................................................. 24
Fideicomiso................................................................................................................... 24
Title Insurance .............................................................................................................. 25
THE DEVELOPMENT TEAM....................................................................................... 26
Gabriel V. Robles.......................................................................................................... 27
Brett C. Ward ................................................................................................................ 28
Jerome R. Cleland......................................................................................................... 29
Mark L. Allen................................................................................................................ 30
Garth N. Ward............................................................................................................... 31
Kevin Young................................................................................................................. 32
Professional Advisors and Consultants......................................................................... 33
EXHIBITS ........................................................................................................................ 34
Exhibit A: Frequently Asked Questions................................................................. 35
Exhibit B: Media Coverage ........................................................................................ 37
Exhibit C: Competitive Market Analysis ................................................................ 39
Presented by Firm Residential and Baja Resort Advsors. This is an unpublished document protected by Federal Copyright Laws.
No unauthorized copying, adaptation, distribution or display is permitted.
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Financial Summary
PORTOFINO RESORT SOURCES AND APPLICATIONS OF FUNDS SCHEDULE
SOURCES AND APPLICATIONS
Investor Capital
Baja Development Partners, LLC Contribution
TOTAL INVESTMENT CAPITAL
REVENUES FROM SALES
70 Two (2) Bedroom Units
20 Three (3) Bedroom Units
10 Penthouse Units
TOTAL REVENUES FROM SALES
EXPENSES
Land Acquisition
Closing Costs
Working Capital
Tax Adjustment
Architect and Engineer
Permitting
Administration
Legal/Accounting/Tax Planning
Sales and Marketing (define in doc)
Construction*
Debt Service Reserve
Debt Service for Private Loans
Construction Management
Common Area Furniture
Contingencies
TOTAL EXPENSES
Amount
$2,700,000
300,000
$3,000,000
Avg. Price
$322,500
$350,000
$591,250
3%
2%
9%
30%
2%
5%
NET PROFIT
Unit $ Sales
$22,575,000
7,000,000
5,912,500
$35,487,500
Totals
$1,500,000
200,000
250,000
200,000
380,160
200,000
253,440
35,000
3,193,875
12,672,000
300,000
900,000
253,440
10,000
633,600
$20,981,515
$14,505,985
* Builder to contribute $1,000,000 interest free loan towards construction costs.
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Financing Strategy
Financing Goals
Our target is to borrow up to $2.7M from individuals personally known to us. This is not a security
offering and not subject to review by any government authority in Mexico or the United States. Baja
Development Partners, LLC is contributing initial capital of $300K to the project. Developer Gabriel
Robles of Baja Resort Advisors, LLC and Builder Osvaldo Castillo of Pacifica Desarrollos Immobiliario,
S.A. de C.V. are collectively contributing $1M of interest free construction financing in exchange for the
construction contract for the project. These commitments are an impressive indicator of the utmost
confidence the development team has in the project.
BDP is seeking up to $2.7M from private lenders for land acquisition and closing costs, architectural plans
and renderings, soils engineering, marketing and working capital. BDP will borrow denominations of $25K
from private lenders at an annual interest rate of 30%. BDP will in turn loan the capital to its wholly owned
Mexican Corporation (formation in process). All loan capital will be managed and returned through BDP.
Private lenders will receive a priority return which will be fully collateralized by a note on the subject
property. Developer profits will be deferred until all loaned capital and interest is returned. To assist with
various tax scenarios, BDP will have three different returns structured:
1.
2.
3.
Interest on loan principal calculated at 30% APR
At the discretion of the developer, private lenders may convert their individual loans to equity which
will likely return 40% to 50% or more. Profit distributions for equity participants, including BDP, will
be disbursed concurrently.
At their sole discretion, private lenders may elect to receive condominium units in lieu of loan
principal and interest returns. In a case where a private lender accepts condo units in payment, they
will be delivered at a price reflecting a 10% discount from retail.
Funding Objectives and Operational Targets
We will begin the project when we have funded the first $2M. (See “Source and Application of Funds”
schedule attached hereto). The majority of construction funding will come from builder financing and
presale proceeds. In the unlikely event that additional bridge financing is necessary, the original private
lenders will have the first right of refusal to lend additional capital at the rate of return contained herein.
The loan criterion is as follows:
•
•
•
•
Collateral- Private loans will be collateralized by the subject property which has been formally
approved to build a minimum of one hundred units by Diego Moreno, Playas de Rosarito Secretary of
Public Works and Ecology (see authorization letter on pages 21-22). An appraisal will be conducted
when entitlements are issued from the city and will show the value of the subject property to exceed
the necessary loan capital.
Builder financing- Builder will finance $1M interest free in exchange for the building contract.
Purchaser financing- Purchaser financing of US $6-13M resulting from pre-construction sales.
Construction financing- Institutional construction financing will be provided by Bancomext, the
Government of Mexico’s trade development bank, (www.bancomext.com.mx) which has special
programs in support of projects such as the one referred to herein. The loan will be collateralized by
sales contracts and promissory notes derived from pre-sales. The mechanisms and application policies
of these loans are well-known and understood by the developer.
Distribution of Profits
The project profits will be distributed in the following sequence:
1. The priority return of all private loans principal
2. Interest return on principal will be made in percentage distributions proportionate to loan amounts until
the agreed upon interest returns have been satisfied.
3. The remaining profits will be distributed to BDP after all loans payments are satisfied.
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Project Summary
The planned development of Portofino Rosarito Residential Resort represents a significant opportunity to
meet the current demand for luxury oceanfront units in a rapidly appreciating mid-market resort area. This
project summary and related prospectus present the background conditions and the market analysis that
provides the basis for a sound financial decision.
Location
Km 43+740 Puerto Nuevo, Baja California, less than a quarter mile north of world renowned Puerto Nuevo
Lobster Village and just south of the famous Las Gaviotas community and main city of Playas de Rosarito,
Baja California. The area is zoned residential and caters to middle and upper middle class American
consumers.
Financial Feasibility Conclusions
Based on the information provided in this prospectus, the Portofino Rosarito Residential Resort is a
financially viable real estate venture with significant upside profit potential beyond the loan service
returned to our private lenders. The summary of the financial feasibility analysis is presented in the
Financial Summary on Page 4.
Relationship of the Parties
The relationship between developer Gabriel Robles of Baja Resort Advisors, LLC and Diego Moreno,
Director of Public Works and Ecology for the municipality of Playas de Rosarito, is considered to be a
major advantage to the project. The two have had both a professional and a personal relationship for
decades, and Mr. Moreno is very familiar with Mr. Robles’ first rate development projects. The quality of
the relationship is evidenced by the formal approval to build 100-units prior to the close of escrow! (See
formal approval letter on pages 21-22.)
General Market Area Summary – Rosarito-Ensenada Corridor
The principal economic sectors in Northern Baja are agriculture, construction, tourism, and services. The
region has been experiencing a significant growth rate in overall economy since 2000 due to a number of
factors. The arrival of several Maquiladoras (foreign-owned factories) in the last few years has bolstered
the local economy by providing substantial employment opportunities. In addition, the explosion of tourism
and hospitality industries has resulted in an unprecedented construction and development. The current
global outlook is one of extreme optimism due to the demand for affordable beachfront real estate in a
Mediterranean climate.
Present Demand for Foreign Owned Housing
According to the consulting firm Accenture (Anderson Consulting) 15,000 units are needed in the
immediate future in the project area. The Secretary of Tourism (SECTURE) in the State of Baja California,
Mexico, estimates the need for vacation homes in the area to be up to 60,000 units by 2009.* As Mexican
real estate attorney Ricardo Cevallos stated at the Procopio Law Firm conference “Investing in Mexican
Real Estate” held February 25, 2006 at the University of San Diego, “Supply is not keeping up with
demand.” See Exhibit A: Media Coverage for additional information regarding growth and demand.
*POLICY BRIEFING PAPER Market Study prepared by University of California San Diego
Cross-Border Tourism Development and Environmental Planning along the Northern Baja California Coast
By L.A. Herzog, Center for U.S.-Mexican Studies, May, 1999
Primary Market Demographic
The February 21, 2006 LA Times article “They're Building in Baja, and Boomers Are Buying” says it all
“…at least 80% of the people buying today on the Baja coast are baby boomers who are spending
$300,000 and up to purchase high-rise oceanfront condominiums...”
80 million “Baby Boomers” are reaching to the age where they’re thinking about recreation and retirement.
Five million Baby Boomers turn fifty each year and scores of them are purchasing foreign property as
retirement or vacation homes. Baja California has the climate and recreational activities conducive to the
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active retirement lifestyle they desire. The overwhelming demand by this segment of our population is
having a dramatic effect on real estate appreciation in Baja.
Marketing Strategy
Marketing will be handled jointly by Firm Residential and Baja Resort Advisors. By
virtue of its project Ventana al Mar, Baja Resort Advisors has acquired a database of
1,200 potential clients who have shown interest in owning beachfront property close
to the subject property. We will aggressively market to this database via direct mail,
telephone and sophisticated internet marketing. The marketing team will also employ
traditional methods of marketing such as onsite signage and a sales center. The group
will also maximize its existing relationships with local brokers from Coldwell
Banker Baja Properties and ReMax Rosarito Beach Real Estate.
Description
A 100-unit condominium project intended for U.S. buyers to be developed on a
beachfront parcel of 5,769.63 m2. An architectural rendering will be completed by
May 15, 2006. All units will have ocean views. (See plat maps and photos of views
in Site Photos, Maps and Documentation on pages 14-20)
Pro Forma Sizes of the Units
70 units at 2 bedrooms/ 2 baths at 1,290 sq ft., plus balcony
20 units at 3 bedrooms/ 2.5 baths at 1,400 sq. ft., plus balcony
10 Penthouses at 2,365 sq. ft., plus balcony
“Coastal property
values and prices
have risen
significantly, though
Baja property is still
a bargain compared
to coastal San Diego
or points north.
Prices
Current market value of property in the area is between $225-$325 per square foot,
depending on location and amenities.
Those who bought
two years ago have
Summary of Expenses and Projected Profit
Gross Projected Sales
$35,487,500
Construction Budget
$12,672,000
Land Acquisition and Closing Costs
$1,700,000
Engineering, Architect, Marketing etc.
$6,609,515
seen their investment
Projected Profit
percent; the one-year
increase by 50
percent to 60
$14,505,985
Projected Sales Pace
All units are expected to be sold within 12 months of groundbreaking. The current
market is a sellers market with most viable projects selling out before completion of
construction.
increase is between
20 percent and 30
percent.”
Comparable Sales
For purposes of this prospectus, the sales price for the units of the subject property
has been calculated at $250 per square foot. That figure is very conservative by
design, especially when compared to today’s prices of comparable properties.
Furthermore, most of the comparables are experiencing staggering pre-construction
and pre-completion sales activity. Please see Exhibit C- Comparative Market
Analysis.
Financing for Buyers
Although historically most buyers pay cash for their units, we have
arranged long-term permanent financing for buyers through Collateral
Mortgage Corporation of San Antonio, Texas, WMC Direct, a subsidiary
of G.E. Capital, out of Burbank, California, and Laredo National Bank of
Mexico. Loan scenarios will vary depending on buyer qualifications.
More traditional instruments such as 25 or 30-year fixed rates at 70%
Loan-to-Value are available.
-San Diego Metropolitan Uptown
Examiner March 2006
7
Construction Funds Management and Spending Control
Baja Development Partners, LLC will contract the services of California Fund Control (CFC), an
experienced construction voucher control company based in Irvine, California. CFC ensures that
construction of the project goes according to budget and disperses contractor compensation based upon predetermined benchmarks.
Stewart Title and Escrow delivers funds to CFC based on the execution of the construction program as
approved by all parties. All contractors who work on Portofino Rosarito Residential Resort are bonded by
multi-billion dollar insurance companies who ensure performance on all contracts signed by the developers.
Developer
Baja Resort Advisors has been instrumental in the development of over 180 successful projects throughout
Mexico, from international hotels and golf courses to mega-resorts and residential developments. Gabriel
Robles, President of Baja Resort Advisors, is also President of the Resort Developers Association of Baja
California, a government and private sector-sanctioned association of developers who seek to ensure
transparent and ethical development activities in Baja, California. The development team has wide ranging
expertise including residential and commercial real estate sales and investment, mortgage, national and
international urban planning, project management and marketing. Mr. Robles’ biography can be viewed on
page 27.
Architect
Francisco J. Ussel-Heredia has a long and distinguished career as an architect in Mexico and his experience
is a considerable asset to Portofino. Mr. Ussel has a relationship with Mr. Diego Moreno, the Secretary of
Urban Development and Ecology for the city of Rosarito and that familiarity will serve to enhance the
relationship with the city officials as well as expedite the entitlement process for the project. Mr. Ussel has
worked on multitudes of projects during his thirty year career, from housing and urban development to
lodging and industrial building. A detailed list of successful projects is available upon request.
Construction Company
Pacifica Desarrollos Immobiliario, S.A. de C.V.
Construction Manager
To be determined
Type of Construction Contract
Turnkey
Technical Construction Information
This project will be built with steel reinforced concrete construction. The exterior will be insulated
concrete stucco finish with stone trim accents. The floors will be decorative concrete, saltillo and ceramic
tile, with choices available in the units.
Date of Commencement of Activities
Programmed in April, 2006, subject to funding, architectural and engineering design and construction
permits.
Construction Time Frames
Months 1-3
Project Planning, Design, Approvals and Marketing
Months 3-5
Construction Documents, Bidding
Months 5-16
Shell Construction, Model Unit
Months 16-18
Unit Finishes, Landscape, Pool, Etc.
Month 18
Grand Opening
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Site Analysis and Area Description
9
Subject Property
The 1.5 acre site is located at the 43+740 km marker in Puerto Nuevo, Baja California,
Mexico. The property is 237 meters off the highway and utilizes the same exit ramp as
Puerto Nuevo’s world famous “Lobster Village.” The property is approximately ¼ mile
north of Lobster Village and its existence is considered to be a significant advantage to
the Portofino Rosarito Residential Resort.
Approximate drive times are 20-25 minutes from downtown San Diego, five minutes
from Rosarito and one minute from Lobster Village.
There are currently six dwellings on the property that will serve as interim management
and sales offices until they are demolished for construction of the project. In addition, the
adjacent ravine on the southern edge of the property is government owned and will be
deeded to the project as a result of developer improvements. The development group is
currently working on the best use with Rosarito’s Director of Public Works, Diego
Morales. For purposes of this prospectus, this additional land is not factored into the
current property dimensions.
Prices in the immediate surrounding neighborhood generally range from $350K to $550K
for ocean view condominiums and $600K- $1M+ for penthouse suites depending on
square footage, view, and amenities. According to local news media and area real estate
brokers, the neighborhood is currently in a state of significant growth and development.
The surrounding area features a number of upscale homes and condominium complexes
on the west side of the toll road and rolling hills dotted sparsely with single family homes
to the east. The neighborhood is in a highly desirable location in relation to downtown
Rosarito and just north of a host of restaurants, markets and retail establishments. Access
to nearby attractions is direct and easily navigable for the unfamiliar traveler.
“Mexico is looking to
build more than one
million new homes
annually... with an
anticipated growth
rate of 4.5 percent per
year in housing
production. Those
impressive statistics,
combined with
Mexico's growing
appeal as a resort
and retirement
Infrastructure
Power
Electrical power is provided through different generators that extensively satisfy the
needs of the population, commerce and industry. Currently they service nearly 600,000
customers, of whom 53,000 are commercial users and 3,000 are industrial; the rest have
other activities and/or are for domestic use. The electrical power industry has the
productive capacity to supply the demand during the next seven years. The actual power
that was installed in the year 2000 is of 2,115 megawatts. A part of the surplus is
exported to the United States or to the bordering state of Sonora.
destination, make it
an attractive market...
Any way you look at
it, it's a win-win
situation.”
The main energy source is endogenous vapor from which more than half of the total
production is generated, reaching 7,500 gigawatts per hour annually. Another
important power alternative will be the gas pipeline in Mexicali that will provide
natural gas to the productive plant and with it there will be more different options for
the fuel supply to industrial customers.
Water
In Baja California the access to tap water is guaranteed. The water source that
supplies the Mexicali valley comes mainly from the Colorado River, as well as
from agricultural water holes that assure ample water supply. The coastal and
central areas depend greatly on water holes and, on a lower scale, rain. These
modern irrigation systems have made the consumption of water more efficient.
– David Wilson, President, National
Association of Home Builders,
January 11, 2006
Highway System
The state's highway system connects the majority of the smallest cities to the largest.
Both the Federal and State Governments promote investments for the creation of tourism
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resting areas along the highways, which include gas stations, pharmacies, mini-markets,
restaurants, restrooms, rest areas and tourism information.
The government has made a special effort to develop and modernize the state highway system.
Currently work is underway to improve the Mexicali-San Felipe highway. Highways such as MexicaliTecate-Tijuana, Tijuana-Ensenada and Mexicali-San Luis Rio Colorado, give the state first class terrestrial
communications among its main destinations. Of special significance to the project is the impending
completion of “Corredor 2000,” a 25 mile new multi-lane super highway connecting the new Otay Mesa
border crossing to Puerto Nuevo. This will allow a very direct and easy route to the subject property. Please
see the map on page 16.
Local Attractions & Entertainment
Puerto Nuevo
This colonial seaside village attracts a broad cross-section of visitors from all age groups. Over the years,
Puerto Nuevo has blossomed from one famous lobster restaurant to a town of over 30 establishments. Walk
around the open-air markets, bargain for beautiful Mexican silver jewelry, shop for souvenirs, or just stop
by for a margarita. The people are friendly and welcoming. Puerto Nuevo holds many festivals during the
year and you can almost always find strolling mariachis to add a distinctive ambience to the seaside
destination known as “Lobster Village.”
Surfing
Rosarito is home to a multitude of excellent surf
breaks like the popular K38. Northern Baja's many
beach and reef breaks offer consistently great surf
year round. Baja gets south swells in summer from
hurricanes or large storms in the South Pacific and
winters swells from the Pacific Northwest making for
very consistent wave action.
Sailing
Sailing conditions in Northern Baja are conducive to
boats of all sizes. Long swells and side shore winds
Puerto Nuevo Style Lobster
in some areas make it ideal for those who want to
surf waves on Hobie Cats and sailboards. Marina berths are under construction and will soon be available
for those who want to maintain larger vessels in the area.
Fishing
Rosarito is home to some of the world's greatest fishing grounds. Sport fishing enthusiasts reel in big game
fish like tuna, marlin, wahoo, dorado and sailfish. Charter boats abound and knowledgeable guides will
direct you to the best spots.
Golf
Rosarito has a host of excellent golf courses. Bajamar offers one of the most spectacular golf experiences in
North America. The "Pebble Beach of Mexico", Bajamar offers a scenic and memorable golfing experience
to players of all skill levels and abilities. All three courses have something unique to offer the golfer.
Restaurants and Nightlife
There are many wonderful restaurants ranging from family owned taco stands to more formal, upscale
dining experiences. Rosarito boasts several bars and discos. Although quiet during the week, Rosarito
comes alive on the weekends with an influx of visitors from across the border. Although many cater to the
younger set, hotels like the Rosarito Beach Hotel and Los Rocas offer live music and nightclubs for all
ages.
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Fox Studios Baja
Fox Studios is the production site for such films as The Titanic, Master and Commander, and Peal Harbor.
Besides some famous set pieces like the streets of old New York, the cars from the modern day version of
"Romeo and Juliet" and the fountain from "Hello Dolly," Fox Studios Baja also includes Cinemagico,
where fledgling directors and stars can try their hand at interactive film making and special effects.
Ensenada
The neighbor to the south is the most extensive municipality in Baja and has the most varied micro climates
in Baja California. Ensenada offers its visitors a wide array of natural attractions covering sea, mountain,
valley and desert locales. The city’s heritage is represented in its historical buildings including the
missions. Ensenada’s Valle de Guadalupe is home to many wineries and is considered the best wine
producer in Mexico. Ensenada is a major cruise ship destination and the seaside village and marina offer
the best in aquatic activities, dining and nightlife.
Climate
The Rosarito-Ensenada corridor enjoys
Mediterranean weather year round, rarely
exceeding 85 degrees F and seldom less
than 55 degrees F. Camping enthusiasts
are drawn to the beauty of the San Pedro
Martir Mountains, the highest area of the
state, where the climate is mild in the
summer and cold in the winter, with snow
in the area of the astronomic observatory.
Rosarito has a Mediterranean climate with
coastal fog and a mild winter rainy season
similar to southern California. The rainy
season runs November through March, with very little to no precipitation the rest of the year. Winter
storms, generated as far away as the Gulf of Alaska provide areas along the coast west of the mountains
with up to 12 inches of rain per year, enough to support sizable forests at higher elevations. Evenings are
generally cooler in comparison to warm daytime temperatures.
Summary of monthly average temperatures and precipitation.
Month:
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
High Temp. 66
68
68
70
72
73
75 77
77
75
72
66
48
50
50
55
57
59
63 66
63
57
54
50
0
0
0.1 0.3 1.2 1.7
Low Temp.
Precipitation 1.9 1.5 1.5 0.8 0.2
0
The above numbers are degrees fahrenheit and inches.
12
SITE PHOTOS, MAPS AND
DOCUMENTATION
13
Aerial Photograph of Project Site
Subject property denoted by red arrow/ yellow box
“Still, with ocean-view homes in California priced at stratospheric levels, investing in
Baja California has become an affordable way for many U.S. citizens to fulfill their
dream of owning beachfront property.”
-The San Diego Union Tribune October 2, 2005
14
Location Maps
Playas de
Rosarito
Site
Location
15
Corredor 2000
Site
Location
“This area will be crossed by the super highway designated ‘Corredor 2000’ scheduled
for completion by the end of this year, connecting the future second Otay Mesa border
crossing with Rosarito. The New Tijuana Master Plan being formulated will include over
250,000 new residences, retirement housing for over 50,000 California expatriates,
vacation homes, resorts, industrial and office parks, shopping centers, a university
campus, a medical plaza, tourist attractions and a municipal airport.”
-Sal Osio, JD, Publisher and Chairman of the Board of HispanicVista.com
HispanicVista.com, March 7, 2005
16
Property Photographs
Ocean-view from western portion of the property
Ocean views from existing terraces
Waterline from the western edge of property
17
View of southern wall of the property.
City officials have committed to
deeding the land in the gorge area
subject to developer improvement.
Entrance to property facing west
Driveway runs the length of the
north side of the property. Grade
is conducive to terracing the
future project’s structures to
maximize density.
Six units currently exist on the property and
will serve as on-site sales and
management offices prior to demolition.
18
Plat Maps
19
20
Approval Letter for Development
21
22
OWNING PROPERTY IN MEXICO
23
Foreigner’s Right to Own
In December 1993, Mexico changed its real estate investment law to allow foreigners
to own land in areas previously designated as restricted zones - within 30 miles of the
beach and 50 miles of the border. The first way this can be accomplished is through a
foreign owned Mexican corporation that allows the entity to take legal title to real
property. The only requirement for this structure is the presence of a commercial
component to the land (i.e. development). Baja Development Partners, LLC is forming
and will manage a subsidiary Mexican corporation for the Portofino Rosarito
Residential Resort project.
“The market has just
become prolific in
Mexico, with about
Fideicomiso
The second legal structure for individual foreign homeowners is called a Fideicomiso
("fee-day-ko-mee-so"). The new laws established an ordinance where the title is
placed in a bank trust. The Fideicomiso is essentially the same as a trust in the United
States by having a trustee who acts as a fiduciary on behalf of the beneficiary
(homeowner) of the trust. As the beneficiary of the trust, the buyer has irrevocable
and absolute ownership rights of the property and can sell it, rent it or bequest it in a
will just like the United States. The Fideicomiso is valid for a term of 50 years and
renewable for an additional 50-year terms in perpetuity. Currently, the price to renew a
bank trust is approximately $500.
1.5 million
Americans now
owning property
there,” says Mitch
Creekmore, vice
president of the
This trust system of ownership is sanctioned by the Mexican government, provided for
under the Mexican constitution, and secured by the Central Bank of Mexico. The SEC
has ruled that a Fideicomiso is equivalent to a "fee simple" title in the U.S. This is how
billions of dollars worth of property in Mexico is owned by foreigners.
Stewart Title
Mechanics of the Fideicomiso (Bank Trust)
Title is delivered to a Mexican bank authorized to act as the trustee and designating the
foreign buyer as the beneficiary of the trust. The bank acts like an "employee" of the
beneficiary in transactions involving the property. The beneficiary retains the use and
control of the property and makes all the investment decisions. The rights of use and
enjoyment, leasing, improving, mortgaging, selling, inheriting and willing the property
are the same as fee simple title in the U.S. The trust is property of the beneficiary
(homeowner) and not the property of the government or the Bank.
one of America’s
A sale becomes registered when it is witnessed and recorded through a Notorio Publico
in Mexico. From there, title passes to the designated bank to be held in the
Fideicomiso. These specific banks are approved to hold the Fideicomiso only after
extreme scrutiny by the Mexican government.
tripled in five years,
Guaranty de Mexico
office in Houston and
foremost experts on
Mexican real-estate
acquisition. “Values
in some markets have
far exceeding the
rates of return you
The bank reviews all paperwork of the current owner/developer to ensure
the documents are complete and legal. The bank will not issue a developer
the right to form the Fideicomiso until all legal title work for the
subdivision has been verified and approved. There is a question that often
arises; in the event the holding bank should ever fail, be bought by an
unauthorized bank, etc., what happens to the Fideicomiso? Answer - the
Fideicomiso will be transferred to another authorized bank. The bank does
not own the Fideicomiso, the homeowner does!
find in the United
States.”
-The Seattle Times Sunday,
March 27, 2005
Unless a problem occurs because of fraud or misrepresentation, the Fideicomiso can not
be compromised (this is where title insurance provides additional protection and peace of
mind). Foreigners often worry about their land being expropriated by the Mexican
government. Under the North American Free Trade Agreement, NAFTA, Mexico may
not directly, or indirectly, expropriate property except for a public purpose. This is the
24
same as "Eminent Domain" in the U.S. Where it is necessary to expropriate land, swift
and fair market compensation must be paid, together with accrued interest.
The Mexican Banking System
In 1997, Mexico changed its banking system and subscribed to the International Banking
Standards. Currently, there is only one Mexican owned bank left. The rest are owned by different
international banks, including Citi Bank and Chase Manhattan.
Fideicomiso- in a Nutshell
The law is very specific about the Real Estate Fideicomiso. This Fideicomiso is designed specifically for
non-nationals to own land in the formerly restricted areas (beach, border region) and is the ONLY legal
way to own this land. It provides the same legal rights and protection of ownership a Mexican citizen has
under the law. It bestows upon the Beneficiary of the Trust absolute and irrevocable control over the
property. The Fideicomiso is set in 50-year increments guaranteed renewable in perpetuity.
As an important aside, development partner Gabriel Robles was instrumental in instituting the concept of
title insurance in Mexico. Serving as Vice President of Investments for the Mexican government agency
FONATUR, the entity credited with founding and developing Cancun and Los Cabos, Mr. Robles was
asked to formally define the bank trust mechanism to the U.S. Securities and Exchange Commission (SEC)
and the Real Estate Commissioners of California, New York, Arizona, and Illinois. The SEC ruled that a
Fideicomiso is equivalent to “fee simple” title in the US.
Title Insurance
Title insurance is a mechanism that guarantees free and clear title to property. As in the United States and
Canada, title insurance can be purchased in Mexico. Property titles can be searched back to the first days of
the Mexican Republic. To ensure clear title and American financing, it’s important to obtain a title
insurance policy when purchasing property in Mexico.
Stewart Title of Houston, Texas is one of the most experienced providers of title insurance in the U.S. and
one of the largest title guaranty companies in the world. They have a division that specializes in Mexican
real estate transactions. With more than 100 years of service to the real estate industry, Stewart Title has
established over 3,500 offices worldwide, including a local office in Tijuana, Mexico. For further
information regarding title insurance analysis and policy issuance, please visit Stewart Title's website at
www.stewarttitle.com.
Portofino Rosarito Residential Resort has contracted with Stewart Title Company to secure all
condominium purchases. Title insurance assures the marketability of title and gives a no-fault recourse in
the event of disputes. The carrier, not the homeowner, shoulders the potential risks and indemnifies against
losses or damages arising from title defects.
25
THE DEVELOPMENT TEAM
26
Gabriel V. Robles
Prior to founding Baja Resort Advisors, LLC, Gabriel Robles directed the
strategic, financial, investment and marketing planning for real estate projects with
the Government of Mexico's resort development branch FONATUR (website:
http://www.fonatur.gob.mx). During his tenure, he was responsible for the 1.2
billion dollar development of Mexico's most famous resort destinations including
Cancun, Ixtapa and Los Cabos.
Having participated in over 180 developments including residential communities,
hotels, golf courses, and mega-resorts, Mr. Robles brings development knowledge
and a network of business and government relationships that are unparalleled.
Mr. Robles was born in Sonora, Mexico and earned both his Bachelors Degree and
Masters of Business Administration (MBA) at the University of Southern
California (USC). He also attended the prestigious Wharton School of
Management and has published several articles on real estate development in
Mexico.
Gabriel V. Robles
The Real Estate Developers
Mr. Robles is the president of the Real Estate Developers Association of Baja
California, an organization whose mandate is to act as liaison between consumers,
the Mexican government and developers to ensure American investments are
protected. He is also the General Partner of Baja Resort Advisors, LLC, which is
currently building the largest development in the Rosarito/Ensenada corridor,
Ventana al Mar. The project’s master plan calls for the development of 2,300
homes for U.S. buyers with a total sellout $800 million over 10 years.
(www.ventanaalmar.com)
Association of Baja
California, a new alliance of
developers working to
implement real estate
standards in Baja California,
has elected its first board.
An extensive resume on Mr. Robles is available upon request
Gabriel V. Robles, managing
MAJOR PROJECTS IN WHICH MR. ROBLES HAS PARTICIPATED
Hotels
Hotel Holiday Inn, Ixtapa
Hotel Holiday Inn, Cancun
Hotel Hyatt Regency, Cancun
Hotel Sheraton Cancun
Hotel Sheraton Ixtapa
Six Archeological Zone Hotels
Club Med, Cancun, Ixtapa, San Carlos
Hotel Palmilla
The Golf Courses
Ixtapa Golf Course, Ixtapa
Pok ta Pok Golf Course, Cancun.
Palmilla Golf Course, Los Cabos
Vacation Club Resorts
Cancun Clipper Club
Pirámides del Rey, Cancun
Marina Club, Cancun Verano
Beat, Cancun
Puerto Las Hadas, Manzanillo
partner of Baja Resort
Mega-projects
Ventana al Mar, Ensenada Mexico
Desarrollo Urbano Tres Rios, Culiacan
Pok ta Pok Golf Course, Cancun
Ixtapa Golf Course, Ixtapa
San Jose Golf Course, San Jose Del Cabo
Bosque Real Golf and Residential
Development, Interlomas, Mexico City
Major U.S. Clients Have Included:
Koll International
Cushman & Wakefield
La Salle Partners
Meridian Hotels
Club Med
Interval International
Brown & Root Engineers
Cinemark Theaters
GMA International
Global Building Solutions, Inc
Advisors LLC in La Jolla,
was named president and will
oversee the development of
the organization’s agenda.
“The Real Estate Developers
Association of Baja
California will serve as a
liaison between consumers,
the Mexican government and
developers to ensure
American investments in
Mexico are sound.”
-San Diego Metropolitan Uptown
Examiner October 12, 2005
27
Brett C. Ward
As the Founding Partner and President of Firm Residential, Mr. Ward’s primary responsibilities are
managing operations and focusing on business development for the company. In just under two years, the
six employee brokerage has built a sizable client base and a solid, technical infrastructure that is intensely
focused on customer relationship management and consultation. As a result of the correction in the
southern California market, the company began to look to other areas for real estate finance and investment
opportunities. Firm Residential now has the ability to originate loans in forty six states and does business
all over the country.
In 2005, Ward began to monitor the real estate market in Baja, California. In order to capitalize on the
forefront of the staggering growth beginning to take place, he acquired the necessary licenses and
assembled a team of professionals to do business in the region. Frequent trips to Rosarito and networking
with local brokers led to the discovery of the development opportunity contained herein. Once the property
was under contract, Ward invited developer Gabriel Robles of Baja Resort Advisors, LLC to participate as
an equity partner.
“While studying the Baja market, Gabriel’s name appeared in one article after another. After I visited his
projects and saw him speak, Baja Resort Advisors was my first and only choice. My only concern was
whether or not I could get a meeting with him. I did, and he loved the project from the start. That told me
all I needed to know.”- Brett Ward
Prior to real estate, Ward was President of 3G Telecom Corp. The small wireless dealer started with one
location at the Mall of Orange in Orange County, CA that accounted for approximately 60-70 new
subscribers per month. Within 18 months, 3G had rocketed to eight retail locations produced 700-900 new
subscribers per month and over $4M in annual sales. In addition to contracting all leasing and expansion,
Ward built the highly technical infrastructure, hired an executive staff, authored all sales training programs
and manuals and instituted policies and procedures for the staff of nearly sixty. Ward sold his 50% interest
in the company to the remaining shareholders at the top of the wireless market. He subsequently opened his
own retail store in San Diego which he ran for three years before moving into the mortgage and real estate
business.
Ward has owned and operated several successful businesses where he has implemented elaborate
information and marketing systems. He has recruited, hired, and trained and managed over one hundred
employees in his professional career. He is extremely hard working and driven and places special emphasis
on the importance of team building as evidenced by this exciting project.
28
Jerome R. Cleland
Having practical knowledge in virtually every aspect of real estate, Jerome Cleland brings a considerable
portfolio of industry experience to the project. As an equity partner of Firm Residential, he is currently
building the infrastructure for the company’s newly formed residential real estate division. Prior to moving
to San Diego, Cleland received the Ruby Award for sales volume while working for one of Chicago’s
largest and most respected real estate brokerages, Century 21 Sussex and Reilly. He also held an equity
interest in CR Resources, a Chicago based real estate services company that facilitates home inspection,
property management, rehabilitation contracting and marketing. Mr. Cleland sold his interest in CR
Resources in 2004 in order to pursue real estate opportunities in San Diego and Baja California.
Cleland’s background is aptly suited to the Portofino Project. He served as project coordinator for the
American Planning Association’s (APA) Fundamentos de Planificacion de Sitios (Site Planning
Fundamentals) workshops in Central America and the Caribbean. These workshops were critical in
educating local and national governments throughout Central America about the importance of best
practices for site selection, planning and development to minimize the negative effects of natural and manmade hazards. He is the author of several published articles on various planning issues and is credited with
the chapter on biodiversity in the textbook, Fundamentos de Planificacion de Sitios.
Cleland received his BA at the University of San Francisco and his Master’s Degree in Urban Planning and
Public Policy from the University of Illinois at Chicago. While at USF, he also served as assistant to the
Building Construction Manager when the university rehabilitated four of its major buildings.
29
Mark L. Allen
Born and raised in San Diego, Mark Allen has been involved in commercial and residential real estate for
nearly twenty years. Mr. Allen currently serves as the broker of record for Firm Residential Mortgage and
Real Estate located in Pacific Beach. He also owns and operates Crown Inn & Suites in Spring Valley, CA
which he purchased in 2004. After rehabilitating the 44 room facility and hiring a management team,
revenues nearly doubled from $29K per month to $56K per month in just over a year.
In 2005, Mr. Allen consummated a commercial land development transaction with a total project cost in
excess of $13M. The land was acquired by foreclosing on a hard money loan he had facilitated for his
family trust. Mr. Allen acquired all entitlements to build a 427,750 square foot distribution facility in
Moreno Valley, CA. His responsibilities included hiring and coordinating the development team consisting
of an architect, civil and soils engineers, an environmental biologist, real estate agents and attorneys, and a
general contractor.
Mr. Allen was responsible for finding and negotiating the $2.2M purchase of the Coast Hotel, a 55-unit
SRO hotel in downtown San Diego located at the corner of 7th & Island just two blocks from Petco Park.
He arranged conventional and hard money financing, brought in additional equity partners & renegotiated a
new lease with the current tenant. The property was reappraised within 1-year at $2.75M- an increase in
equity of $550K.
In addition to the aforementioned, Mr. Allen has participated in a multitude of smaller residential and
commercial real estate transactions. Prior to his full-time foray into real estate, he attended Brown
University before graduating from UC Berkeley in 1987 with a BA in Economics. Mark acquired his real
estate agent’s license while in college and upon graduation returned home and began selling and leasing
industrial real estate for Scher-Voit Commercial.
30
Garth N. Ward
Mr. Ward is an attorney-at-law licensed by the State of California. He is employed by Lewis, Brisbois,
Bisgaard and Smith, the fifth largest law firm in the state which has 12 offices nationwide. Ward
specializes in complex litigation and devotes a large portion of his practice to the representation of real
estate brokers and agencies, architects and engineers. He also represents general contractors in multimillion dollar construction defect claims. Some of his clients include large corporations on whose behalf he
negotiates and drafts complicated contracts, leases, purchase and sale agreements.
Ward received his Juris Doctorate from Golden Gate University School of Law in 1999. He was selected
for Law Review, earned the American Jurisprudence award in several courses, was elected to the Student
Bar Association as class representative, and competed in a National Moot Court competition in New York.
He also received academic honors by making the Dean's List and held clerkships with both the United
States Department of Justice and the California Attorneys General Office. As an undergraduate at
California State University, Chico, Ward received his B.A. in International Relations and minored in Urban
Planning and Development.
Mr. Ward currently resides in Mission Hills in San Diego, California. He has lived in both Spain and Costa
Rica and has traveled in numerous Latin countries. He is a proficient Spanish speaker and thoroughly
enjoys the culture and people of Mexico. He is the younger brother of Brett Ward.
31
Kevin Young
Kevin Young has been retained to assist Baja Development Partners, LLC in creating a comprehensive
promotional marketing strategy to showcase Portofino Residential Resort. Mr. Young’s marketing
expertise and extensive business network will expose the BDP’s investment opportunities and initiatives to
the public and business sectors alike. His business acumen and deep understanding of market trends
provides BDP with the necessary skill set to take ownership of its marketing goals and sales objectives.
Young’s past experience in working with Brett Ward has given him a trusted entrée in getting to better
understand the opportunities surrounding the Baja Real Estate sector and its momentous and subsequent
market trends. After studying real estate in the Baja region of Mexico, Young commented;
“Usually people only get a few chances in their life to
capitalize on a trend that’s destined to provide great
opportunities for those who take action. Baja Real
Estate is one of those rare opportunities.
I was fortunate to purchase prime Real Estate on Lake Washington over a decade ago which turned out to
be one of the best investments I’ve ever made. Timing is everything for those who have a little vision and I
see the opportunity in Baja just like I did in Kirkland. Thousands of Microsoft Millionaires and other high
net worth individuals clamored to my waterfront community driving the property values into the millions.
I’m excited to bring this unique Baja development project to my personal network and the general public
so others can achieve results like I did.”
Young’s decision to work with BDP is due to the solid business model the group developed which
complements his ability to expose the project to the marketplace. His role will be coordinating the
appropriate marketing and promotional strategy to build awareness to Portofino Residential Resort project.
Young brings an honest, hard working approach to a project that requires a hybrid and solution-based
marketing mechanism to give prospective investors and buyers a professional, high impact experience.
As one the founders of the U.S. Pre-Paid Phone Card Industry in the early 90’s, he understands what it
takes to transfer information and new products to an uninformed market. As National Sales Director for
World Telecom Group, Young was instrumental in launching the first U.S. pre-paid product to a market
that exceeds $10B in annual revenues today. Since that time, Mr. Young has started several high tech
entrepreneurial ventures, marketing companies and successful consulting arms to meet the ever increasing
demand of the high tech’s industries thirst to progress and innovate. Along with this experience Kevin has
established a knowledge base of business methods, technologies systems and tools and key contacts. When
combined for use in any industry, these personal and business assets create a powerful and successful
platform for a venture to leverage when executing a marketing and sales campaign.
Kevin currently is a working investor in a 5th generation Business Process Automation Software Company
located in San Diego, CA called Visualnet.tv. He’s also a key partner in a “Clean Coal” technology
venture called AllCleanEnergy, LLC in Arizona doing business globally and has a Venture Catalyst
Company called Young Private Consulting, LLC. Here he assists early stage private businesses to align
best-of-breed programs and methods to accelerate their goals and Company objectives. This is
accomplished primarily by connecting high net worth investors to private equity projects through his
online Venture2show.com transaction management service.
Young has the ability to assist Baja Development Partners in crafting a technologically advanced strategy
to penetrate the mass market. He has personally experienced the investment virtues of real estate and is
keenly aware of the migration the Baby Boomers are making towards a more comfortable climate, location
and lifestyle. His goal is to make BDP a market dominant provider of exceptional Baja properties to a
community of investors and property owners who seek opportunities like the Portofino Residential Resort.
32
Professional Advisors and Consultants
RODRIGO ARMADA OSORIO, Attorney at Law
Ishino, Esquer Y Armada, S.C.
Mr. Armada will serve as the Mexican counsel for Baja Development Partners. His responsibilities include
all bilingual purchase, corporate and title contract work for the project. As a partner in the firm, Armada is
well versed in land acquisition and real estate development in Mexico. He is working closely with Garth
Ward to ensure that all legal elements are sound on both
sides of the border.
Armada is a member of the National Association of
Corporate Counsel, Baja California Branch (Mexico) and
Professor of Law for the Centro de Estudios Superiores del
Noroeste, Tijuana Baja California.
A former Associate with Baker & McKenzie Tijuana Office (1990-1999), Armada’s practice areas include
Real Estate, Infrastructure Development Projects, Contracts, Joint Ventures, Environmental, Corporate and
Partnership Law, Foreign Investment and Transactional law. He is fluent in both Spanish and English.
EDUCATION: Universidad Iberoamericana. Masters of Law (LL.M.), Notre Dame University, (London
Campus), London, England (1997).
http://ishinolaw.com/ingles/overview.htm
BARBRO HURLOCK, ROBERT DONNELL, IRENE DONNELL, Sales & Marketing Team
Baja Resort Advisors, LLC
The sales team at Baja Resort Advisors has extensive
experience marketing properties all over Mexico. The
group most recently sold $10M worth of properties in
one weekend for Ventana al Mar by hosting an auction
at La Costa Hotel and Spa in November 2005.
Managed by Ms. Hurlock, the team will utilize the techniques and strategies that have proven successful in
scores of development projects managed by Baja Resort Advisors. This will include sophisticated internet
marketing, direct mail, print media and client contact via telephone. The team will also leverage its interest
list, a database composed of over 1200 people who have inquired about beachfront property in the
Rosarito-Ensenada corridor.
JAMES BOGLE, Vice-President of Lending, Firm Residential
Although the mechanics of securing a loan in Mexico require some
complicated steps, Mr. Bogle’s primary concern is to make the process
a simple one for borrowers. Serving as liaison, he has partnered Firm
Residential with several US and Mexican lenders to ensure any and all
loan programs are available to our buyers. He will oversee the onsite
team of loan officers to ensure all buyers are qualified properly and
educated on the differences between mortgage products in U.S. and
Mexico.
33
EXHIBITS
34
Exhibit A: Frequently Asked Questions
How will Portofino Rosarito Residential Resort be priced?
Portofino condominiums are priced at approximately 75% less than comparable properties in Southern
California which is why there is such a demand in this market. A comparable ocean front condominium in
San Diego costs approximately $1,700,000 compared to Portofino’s average price of $350,000 or about
$250 per square foot. In addition, property taxes in Mexico are significantly less than California which is a
key selling point for Baby Boomers.
How much are property taxes?
Annual property taxes, together with federal zone fee, run about ¼% of the total purchase price annually.
For example, an owner of a $500,000 home would pay approximately $1050 per year.
Will there be a homeowner association to manage the property?
Yes, there will be an HOA. The association will ensure a high standard of maintenance and will have the
kind of guidelines to which Americans are accustomed. Costs will be approximately $0.10/SqFt per month.
What about TV & internet?
Cable or satellite service and hi-speed internet will be available.
What about homeowner's insurance?
Typically, a homeowner’s insurance policy runs $600-$1000 per year and is available through any number
of Mexican insurance companies.
What are the main reasons to consider buying property in Baja California?
First and foremost, price appreciation. In addition, oceanfront living at a fraction of the cost of comparable
properties in the US, proximity to the US, climate, and lifestyle are all reasons Americans are flocking to
this hotspot. Baja California is experiencing unprecedented growth as reported in major publications such
as Time Magazine, L.A. Times, N.Y. Times, San Diego Union Tribune and the San Francisco Chronicle.
Please see Exhibit B: Media Coverage.
How many Americans live in Baja Mexico?
In the past five years approximately 100,000 Americans have re-located to Baja, California. According to
the U.S. government, more than 600,000 Americans reside in Mexico year round. The population in
Rosarito is estimated at 85,000 with about 25,000 of them hailing from North America.
“The town of Rosarito, south of Tijuana, is ¼ American. 70% of the beachfront is owned by Americans.”
CBS News Special Report by Bill Whitaker May 20, 2004
Who stands to benefit the most by retiring in Baja?
There are 80 million Baby Boomers thinking more actively about retirement. Many of these Baby Boomers
will be attracted by how far their retirement dollars will go south of the border. As the bulk of the boomers
retire, it is predicted they will drive real estate prices up due to overwhelming demand. Five million Baby
Boomers turn fifty each year and this will continue for a decade!
How would you rate the geographic location of Rosarito-Ensenada corridor in Baja
California?
The topography and climate are virtually identical to San Diego. Rosarito enjoys sunshine 330 days a year.
The temperate climate combined with miles of pristine beaches along the Pacific Ocean makes the area a
very attractive location for retirement and/or vacation. The Rosarito-Ensenada corridor offers a myriad of
recreational opportunities such as sport fishing, boating, water skiing, surfing, diving, hunting, wine tasting,
camping, dining, shopping or just plain relaxing.
How does the area compare with areas like Cabo San Lucas, San Felipe and Puerto
Peñasco?
The Rosarito-Ensenada area is the Cabo San Lucas of the future, only better, due to its climate and
proximity to the U.S. The easy drive 25 minutes drive south of the border makes it the ideal location for a
35
new destination resort community. The climate in northern Baja is more appealing year round. It is quite
similar to San Diego, California. The 110 to 120F degree summer weather in more southern locations in
Baja do not appeal to most people.
Is industry and business heavily investing in Baja?
Yes, major Fortune 500 companies such as Citicorp, Microsoft, Nortel, U.S. Sprint, and Telscape are
investing billions of dollars in Mexico. Toyota Motors is investing almost one billion dollars in a new plant
in Baja. Between 1994 and 2000, Mexico received $74.1 billion in direct foreign investment dollars. Latin
America is the fastest growing market in our global economy.
"The Southern California and Baja California economies will soon become one integrated economy."
San Francisco Chronicle May 20, 1999)
Does Mexico have the same day-to-day conveniences as the United States?
With the rapid building boom has come an increase in amenities. Fine restaurants, golf courses, and
wineries are springing up at a feverish pace and American businesses are establishing a presence. Some of
those include:
•
•
•
•
•
•
•
•
•
•
•
•
7-11 Convenience stores
AM/PM Convenience stores
Blockbuster Video
Burger King
Carl's Jr.
Costco (2 stores)
Domino's Pizza
Ford Motors
GMC
Godfathers Pizza
Home Depot (2 stores)
Wendy's
•
•
•
•
•
•
•
•
•
•
•
Hyundai
Jack In the Box
KFC
McDonalds
Movie Theatres
Office Depot
Sam's Club
Smart & Final (2 stores)
TGI Fridays
Toyota
Volvo
FONATUR, a division of the Mexican Secretary of Tourism, has designated the entire Baja
California Peninsula a priority zone. What impact will this have on the area?
FONATUR (National Trust Fund for Tourism Development) has long considered Baja California a prime
development site. When FONATUR designates a master planned development area, it quickly becomes a
world-class resort destination. The growth in Cabo San Lucas, Puerto Vallarta, Cancun, Acapulco and
Ixtapa is evidence of the success of FONATUR.
In July 2004, the Governor of Baja and the Secretary of Tourism both pledged tax dollars to stimulate
growth and tourism in northern Baja. The impact on the Rosarito-Ensenada Corridor will be infrastructure
improvements, influx of development dollars, business and real estate growth.
There is a phenomenon called the "Fifth Migration" that is having a tremendous influence
on property values. What is it and what impact is it having?
The fifth migration refers to the fact that many people are tired of the density, crime, traffic congestion and
pollution of the crowded cities and want to live elsewhere. Due to advances in telecommunications, fiber
optics, and the internet, people don't have to live in the city or suburbs and commute to work anymore.
With a computer and a phone, a person can live on the beach and do business anywhere in the world. This
phenomenon is revolutionizing the corporate world and fueling real estate in areas that were once regarded
exclusively as vacation property.
36
Exhibit B: Media Coverage
“Everybody wants a piece of the cake. This is a
process that’s just beginning.”
Diego Moreno* Director of Public Works, Rosarito
*Mr. Diego Moreno is responsible for approving all permits. Please
see the attached permit in which he remarks on similar projects
tending to sell out quickly.
“The northern coast of Baja California, from
Tijuana to Ensenada, offers an excellent example of
a region whose growth profile is underscored by
massive cross-border tourism development. The
development potential of the corridor is heightened
by an unusual confluence of factors: the natural
beauty of the coastline, the proximity of a high
density population market in southern California,
and the relative ease of travel between California
and Baja California. Development is further
enhanced by the significantly lower price of coastal
land by comparison with the U.S. side of the border,
and, as a result, the huge attraction of the coastal
quality of life as a marketing force in California. In
short, economic integration serves to make Baja
California an extension of the California coastline in
a region where the celebration of the outdoors and of
leisure is a major industry.”
-POLICY BRIEFING PAPER Market Study prepared by
University of California San Diego
Cross-Border Tourism Development and Environmental Planning
along the Northern Baja California Coast
“For example, projections by the Mexican
government suggest that the demand for vacation
homes in northern Baja could be as high as 60,000
by 2009 (see Table 1). The overall transformation of
this part of the peninsula is premised, in fact, upon
its marketability to Americans and other well heeled
foreigners, as well as the small, but growing upper
middle class of Baja California. The developers,
banks, global hotel chains and restaurants,
architects and other participants in development will
increasingly enter the picture as they see the
potential of a kind of "French Riviera" development
built around tourism, resorts, vacation housing,
condos and ocean front town houses. If one accepts
Tijuana's population at about 1.5 million and
Ensenada at .5 million and the area in between at
about 75,000, the total population of over 2 million
inhabitants will probably double in the next 20
years.”
-POLICY BRIEFING PAPER Market Study prepared by
University of California San Diego
Cross-Border Tourism Development and Environmental Planning
along the Northern Baja California Coast
“Stewart Title Guaranty has taken an extra step of
complying with Mexican investment and bonding
laws and requirements incorporating Stewart Title
Guaranty de Mexico, S.A. de C.V. and opening
offices in Mexico. The firm has the distinction of
being the first-and to date the only – U.S. title
guarantee company in Mexico. Plus, its fiduciary
status acts as an escrow company, thereby
eliminating one more risk.”
-San Diego Metropolitan Magazine/The Connection August
2005
Suddenly, living in Baja California while working in
San Diego seems more affordable than ever.
Likewise, investing in a resort or weekend getaway
home has become more attractive than just a few
years ago.
-San Diego Metropolitan Uptown Examiner September 2005
Just a couple of years ago, buyers of property in
Baja were often senior citizens. Now the younger
generation is discovering the area for recreation,
residence and future retirement a potentially high
return on investment.
-San Diego Metropolitan Uptown Examiner September 2005
“The market has just become prolific in Mexico, with
about 1.5 million Americans now owning property
there,” says Mitch Creekmore, vice president of the
Stewart Title Guaranty de Mexico office in Houston
and one of America’s foremost experts on Mexican
real-estate acquisition. “Values in some markets
have tripled in five years, far exceeding the rates of
return you find in the United States.”
-The Seattle Times Sunday, March 27, 2005
“Under NAFTA and other reforms, the Mexican
government can’t discriminate against foreigners in
terms of property ownership.”
-The Seattle Times Sunday, March 27, 2005
Jeronimo Gomez del Campo, partner in the Phoenix office of
Bryan Cave, who specializes in the representation of U.S.
companies and financial institutions investing in Mexico.
“Property values have risen rapidly and in many
cases have more than tripled in the past half-decade,
It’s been almost astronomical. I guess because we
were so behind the U.S. for so long, everything here
seems like a bargain.”
-Ted Downward, co-owner Century 21 Paradise in Los Cabos
in The Seattle Times Sunday, March 27, 2005
“People will come by the hundreds of thousands.
You cannot build great things in America today –
Regulations and litigation prevent change.”
-David Butterfield, Developer
The New York Times October 26, 2003
37
For these and many other reasons, Gustavo Torres
advises, this is definitely the best time to invest in the
Baja California area. “It is a secured investment,
and a great investment. Mexican people and mostly
Rosaritans love Americans here, as they help us a lot
supporting the Red Cross, Fire Department, DIF,
and many more places, and they welcome you with
arms wide open.”
-Gustavo Torres, San Diego Metropolitan
Magazine Sept 2005
“Nowadays, the commute from your home at
Rosarito Beach to your office in San Diego would be
the envy of most commuters trying to get around Los
Angeles or Orange County.”
-Santiago Gil, commercial director of Cimas del Parque, San
Diego Metropolitan Magazine Sept 2005
The Real Estate Developers Association of Baja
California, a new alliance of developers working to
implement real estate standards in Baja California,
has elected its first board. Gabriel V. Robles,
managing partner of Baja Resort Advisors LLC in La
Jolla, was named president and will oversee the
development of the organization’s agenda. “The
Real Estate Developers Association of Baja
California will serve as a liaison between
consumers, the Mexican government and developers
to ensure American investments in Mexico are
sound.”
“An increasing number of Americans are moving
here to escape their government’s policies and the
costs of living. They find a higher standard of living
and a greater degree of freedom.” Herb Kinsey,
resident of Rosarito
-The New York Times October 26, 2003
Still, with ocean-view homes in California priced at
stratospheric levels, investing in Baja California has
become an affordable way for many U.S. citizens to
fulfill their dream of owning beachfront property.
“To buy a place the equivalent of that up here, you’d
be paying in the millions,” Todd Glimme, New Baja
condo owner
“Two years ago, you could find a nice oceanfront
home for $220,000. Now they are selling for
$580,000.” Gustavo Torres, Baja Realtor
Those seeking to buy a second home or a primary
residence in Baja have a different questions, but they
too are rooted in the “it is safe” concerns. While we
have dealt with various concerns in the past, the
bottom line is “yes,” it is safe provided guidelines
are followed.
San Diego Metropolitan Uptown Examiner September 2005
-San Diego Metropolitan Uptown Examiner October 12, 2005
Coastal property values and prices have risen
significantly, though Baja property is still a bargain
compared to coastal San Diego or points north.
Those who bought two years ago have seen their
investment increase by 50 percent to 60 percent; the
one-year increase is between 20 percent and 30
percent.
Finally, the high cost of housing throughout
Southern California and the Baby Boom generation
nearing retirement, is exploding the demand for
lower-priced luxury housing in Baja California’s
coast.
San Diego Metropolitan Magazine February 2006
-The Connection/San Diego Metropolitan Uptown Examiner
March 2006
38
Exhibit C: Competitive Market Analysis
Source: Palacio Del Mar, March 2, 2004
Development
% Sales as of April 1, 2006
Due Date
Las Olas Grand
Las Olas Mar y Sol
The Residenences
Palacio Del Mar
Las Palmas
Calafia II
Club Marena
La Jolla Real
Las Brisas
52% sold
71% sold
80% sold
Tower 1 is 83% sold
80% sold
90% sold
3 of 4 towers sold out
67% sold
10 sold of 12 in phase 1
Spring 2007
Spring 2008
Sep-07
Tower 1, June 2008
Dec-06
4th tower Dec 2006
Winter 2007-2008
Spring 2008
39

Portofino Rosarito Residential Resort

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