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Ship Shape
This year alone, Carnival Corp. will introduce the ships Inspiration and Destiny (see page 46), Princess will introduce the Grand Princess, and Royal Caribbean the Splendour of the Seas and the Grandeur of the Seas. These new ships are as much as 900 feet long and accommodate at least 1,800 passengers.
Further, there are more than two dozen cruise ships on order right now, most of them weighing at least 60,000 tons and capable of carrying 2,000 or more passengers. Carnival's $400 million ship Destiny will weigh 101,000 tons, the world's largest. Seeing this, McCrory and four other prominent South Florida real estate professionals started Port Developers. "When we looked at the industry, from our vantage point the existing ports in the Caribbean appeared to be overtaxed," McCrory says. The five principals have complementary talents in development and in doing business in the Caribbean. Chairman Edward R. Allen is a former CEO of InterCoastal Communities, a publicly traded builder of manufactured homes now known as Chateau Properties. McCrory is a lawyer specializing in real estate finance. Robert Gates founded Gates Construction Corp., which builds marine facilities and ports. Bob Moss is the CEO of Centex Rooney Construction, which has long experience in the Caribbean. Edward D. Stone Jr. runs his own architectural planning and design firm.
Earlier this year, the company completed its first project when it sold Gorda Cay, an uninhabited 1,000-acre Bahamian island, to the Walt Disney Co. Port Developers had completed initial design and engineering work on the island, which Disney plans to use as an exclusive port of call when its two 85,000-ton, 2,300-passenger cruise ships enter service in 1998. Bob Shinn, senior vice president and general manager of Walt Disney Imagineering, says Gorda Cay was "an ideal choice for us and we're happy to own it." He says owning the island will give Disney a chance to offer cruise passengers a distinctive vacation experience.
Now, Port Developers is looking at a handful of other projects. It has submitted a joint venture plan to Freeport Harbour Co., which operates the Port of Freeport on Grand Bahama, to help build and operate a complex of passenger terminals, shops, restaurants and recreational facilities. The company is talking with both cruise lines and the government of the Turks and Caicos Islands about building a port on the island of Grand Turk. Several Miami-based seven-day cruise routes bring ships near Grand Turk on the second and fifth days of the trip. Allen and McCrory say two cruise lines have expressed interest in the project.
Building in the Caribbean isn't as simple as successfully bidding on contracts, however. Allen and McCrory say many Caribbean governments lack the money to pay for big construction projects, so Port Developers must find its own investors and make deals to operate the ports after construction.
"The governments themselves do not have the wherewithal to pay for port expansions," Allen says. "That's the niche where we come in." Port Developers is willing to enter partnerships with government or take lease deals that give it long-term management rights at the port. McCrory believes there is room to build six new ports in the Caribbean, plus renovate numerous existing ports. Because these projects are large in scope, requiring a financial investment of $25 million to $50 million each, Port Developers is looking for a partner to help it with financing. Allen says the company is talking to several potential investors, all of them large international firms. "At this point, it's a new industry, and I think most big companies don't like new industries. They leave it to entrepreneurs to take the risk, and once they see the opportunity they pay what it takes to buy into it," Allen says.
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Welcome to the Canal Zone
At the end of 1999, the U.S. will turn the Panama Canal over to Panama. By then, it also will have given back some 364,000 acres and 7,000 facilities in the Canal Zone. Panama's government is working hard to find ways to utilize the land and buildings, mostly U.S. military property, for productive use.
To that end, former President Nicolas Ardito Barletta, who heads Panama's Inter- oceanic Regional Authority (ARI) overseeing the reversion of the Canal Zone property, recently came to Miami to court potential investors. Panama still suffers from the legacy of Gen. Manuel Noriega's narco-dictatorship in the 1980s. And recent allegations that current President Ernesto Perez Balladares took campaign contributions from the Cali drug cartel have stung the country's efforts to rehabilitate its image.
But two former U.S. ambassadors to Panama, Everett Ellis Briggs and Miamian Ambler Moss, say they are optimistic about the future. "Panama has the best prepared entrepreneurial class" on a per capita basis in Latin America, Briggs says. "I believe Panama offers as much opportunity for Americans as any country in Latin America."
To encourage wary foreign investors, Panama will join the World Trade Organization this year. It has begun the process of privatizing the national telephone company and two state run ports. BellSouth and a Panamanian partner recently won the right to provide cellular phone service in Panama by bidding $72.6 million, or a hefty $27 per person. Panama needs help modernizing its ports. Some 14,000 ships per year pass through the canal, but Panama doesn't capture as much of the refueling and maintenance business for those ships as it would like. The country is taking bids from several private companies to make $200 million in port improvements.
Panama hopes to increase its own exports by converting some military property to industrial use. A good portion of the U.S. holdings, however, will be converted to tourism. Carnival Hotels, a joint venture between Miami-based Carnival Corp. and the Continental Cos., recently signed a letter of intent with ARI to develop a 200-room hotel at the Pacific Ocean entrance to the canal. Panama hopes to have a cruise port open by 1999.
"I have a vision that the opportunity for Panama resembles a bit what Singapore has done in the Far East," Ardito Barletta says. Investors can contact ARI at (507) 228-8139 or by Email at Ari@ns.sinfo.net.
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International Briefs
Know your customer. That's the lesson of the money laundering scandal being unraveled at the former MegaBank in Miami. Blanca Piedad-Ortiz, former vice president of MegaBank's international department, her assistant and two others were indicted in June by federal prosecutors. MegaBank was acquired by Fort Lauderdale's BankAtlantic in 1995, and BankAtlantic employees first discovered problem accounts last year and reported them to regulators. BankAtlantic President Jon O'Neill estimates $20 million in problem accounts will be turned over to law enforcement authorities.
MegaBank's former top executives say they had no idea of any malfeasance, and the bank passed routine Federal Reserve audits. But most of the accounts in question were undocumented, suggesting a lack of institutional control in MegaBank's international department.
Information technology sales in Latin America totaled $12 billion in 1995 and should reach $23 billion by 1999, reports International Data Group, a Boston-based research company. The Latin market is being dominated by major U.S. technology brands, such as IBM, Canon, Digital Equipment and Hewlett-Packard, IDG reports. The trend could result in more companies setting up Latin distribution and sales offices in South Florida.
