Image conscious vulture fund, Lone Star, which is in the middle of sensitive negotiations to acquire Novo Banco from the Resolution Fund - at a vast loss to Portugal’s taxpayers - has put its Vilamoura World development up for sale, including the marina.
Sales agency CBRE, which also is trying to punt the Salgados Praia Grande ‘eco-resort’ on behalf of MillenniumBPB, has been appointed to sell off the Vilamoura asset for the US fund, in parcels or as a job lot - either way, the Americans want out.
Lone Star bought the Vilamoura development in March 2015 with grand plans to divide up the area into 18 distinct themed building zones and sell each to a different investor, thus making good returns for its shareholders.
Dividing up the development was the flaw in the grand plan, witness the fact that well over two years later, not a single plot has been sold and the people in charge, Paul Taylor followed by Juan Gómez-Vega, no longer are managing the Vilamoura World business.
Lone Star paid €200 million for the development site, well below the €360 million that Catalunya Banc had paid André Jordan when he sold out with inspired timing.
In September 2015, the then-CEO of Vilamoura World, Paul Taylor, announced a €1 billion investment in the project to renovate the marina's surrounding area and develop 18 separate real estate projects, "scheduled for completion by 2020."
In October 2016, Paul Taylor was replaced by Juan Gómez-Vega who has been replaced by Dominique Cressot who now needs to inject something other than the current note of panic into Lone Star’s business activities.
In January 2017, Gómez-Vega considered his new job a “huge professional challenge” and said his short-term goal is to “accelerate and reformulate” the resort’s huge billion-euro masterplan.
Vilamoura Lakes, a Project of Potential National Interest (PIN), is not on the ‘for sale’ list but the expected construction start time of 2017 is fast running out.
Lone Star has done some good deals in Portugal but its purchase of Vilamoura and flawed development plan, shows that even vulture funds can make big mistakes.
Whether Lone Star will get out of this at a profit remains to be seen, its current pricing for the development is ‘sporty’ (and confidential), but the fact that its well presented plans lie in tatters gives rising concern whether or not the company knows what to do when it comes to running Novo Banco, one of Portugal’s largest banks.
