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Post Obama's Cuba Initiative and US Investment
Created by John Eipper on 12/18/14 7:46 PM

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Obama's Cuba Initiative and US Investment (Randy Black, USA, 12/18/14 7:46 pm)

Regarding the opening of diplomatic relations with Cuba by the US president, John Eipper said on 18 December, "Expect a flood of US investment and tourism." I believe that we had a similar discussion on Cuban tourism a few years ago. It involved the matter of the major cruise lines that called on Cuban ports and other tourism issues.

I agree with John that tourism from the US to Cuba will develop quickly. However, as to investment by Americans in the Cuban tourism industry, we are way late to the game. Spain, Canada, the UK and others have invested in Cuban tourism for decades.

A quick review of the online reservations apparatus finds dozens if not hundreds of foreign resorts and hotels and their management arms already operating their three, four and five-star operations across the island and in more than a dozen Cuban locales.

For instance, Melia hotels and resorts has more than 26 properties offering the best in resort operations, most of them all-inclusive.

The globally known Iberostar chain is among the largest operations in Cuba.

Barceló also has a significant presence in Cuba. I recall that one of the major Spanish hotel and resort operators managed the hotel where WAIS had its conference in Torquay, England three years ago.

From Frommers: "Most hotel options in Cuba have been divvied up among a few large state-run chains: Islazul, Gaviota, Cubanacán, Gran Caribe, and Habaguanex. These chains generally stake out distinct territories. Habaguanex has near monopoly control over the hotel scene in La Habana Vieja in Havana. Their properties tend to be midrange to upper end, and most are in beautifully restored colonial buildings. Gaviota, Cubanacán, and Gran Caribe divvy up the remainder of the midrange to upper-end hotels around the country. Islazul runs the most economical hotels, although it has begun refurbishing some real gems in the colonial heart of some of Cuba's more interesting cities. Cubanacán is also upgrading properties with its Hoteles Encanto brand.

"These large state-run companies have signed management contracts with international hotel chains, usually resulting in improved service and hospitality.

"While the international Barceló, NH Hoteles, Iberostar, Accor, and Occidental chains run a few hotels each, predominantly in Havana and Varadero, the major player is the Spanish Sol Meliá chain, which manages 24 midrange to high-end properties in Cuba.

"...You'll definitely do better with the larger international chains like Sol Meliá, Occidental, and Barceló.

"There are consistently competitive live availability deals offered on www.cubahotelreservation.com, and hotels honor these reservations with good rooms."

My point is that it will take decades more for the American investors to make inroads into the resorts operations industry in Cuba.

The best part of this in my mind is that North Americans will have a close by-easy and cheap-to-get-to choice other than the Bahamas.

When I was in the tourism and resort operations business in the 1980s to early 1990s, our COO was a Cuban immigrant who'd escaped with his parents in the 1960s.

One beautiful day in 1991, when we were flying in the company jet from Miami to a Caribbean destination to look over a property that he wanted to add to our family of resorts, our flight plan took us directly over Cuba.

Crossing the Cuban coastline, as we gazed down on the sugar white beaches, and with a tear in his eye, the fine gentleman looked down at his homeland and remarked, "These are the finest beaches in the Caribbean. Some day we will operate there and then the Cubans will put the Bahamians out of business for good."

His comment reflected the mood of resort operators and investors who were fed up with the constant negative attitude of Bahamian labor union organizers who could and did shut down tourist operations in the Bahamas for the tiniest faux pas on the part of management.

JE comments: I absolutely agree with Randy Black--the Spanish (primarily Catalan) resort industry is in a position of near-absolute dominance. We could say the same thing already about Cancún and Playa del Carmen in Mexico. I wrote that the Obama initiative will unleash "US investment and tourism," not "US investment in tourism." We Gringos will be the consumers of the all-inclusive products from Iberostar, Meliá, Riu, and the like.  And that will unleash a sea change in Cuba.


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  • Investing in Cuba; from Ric Mauricio (John Eipper, USA 12/19/14 8:00 PM)
    Ric Mauricio sends this response to Randy Black (18 December):

    Interesting analysis, Randy. You say Americans are way too late to the resort game and that it would take decades more for Americans to make inroads in Cuba. But wait, if I were the Blackstone Group (BX) and I have at my disposal billions of dollars plus the branding of Hilton Worldwide (you know, the operators of the Waldorf, the Conrad, and the Hiltons around the world), couldn't I just buy some of the existing hotels? If I were Wyndham (WYN), founded by Trammell Crow in Dallas, couldn't I just add a few more hotels to my hundreds of hotels around the world? If I were Starwood Hotels (HOT), the fifth largest global hotel chain based in the US, I am sure I could make a deal with one of the hotel chains in Cuba. Let's not forget the Marriott International (MAR). But my bet (disclaimer, I do not own this stock, yet) is on IHG (IHG), with 4,600 hotels globally, 674,000 rooms in over 100 countries, they have enough money in their back pocket to gobble up entire hotel chains (which they have been doing). So snap your fingers, sit down with some owners (everything is for sale), and voila, America is in the Cuban resort business.


    But before that happens, you can buy Copa Airlines (CPA), which flies to Cuba, although not from the US, though I am sure that they probably are working on a Miami-to-Havana or a Dallas-to-Havana flight as we speak. Or you can bet on United Continental (UAL). Non-stop to Havana from LAX, JFK, O'Hare, SFO... you bet.


    But do not buy the closed-end fund CUBA. Currently it is trading at a 30% premium to its net asset value. Oh, when these investors realize that CUBA is not really invested in Cuba, they're going to freak. CUBA holds stocks like Carnival Cruise and Chiquita Brands, not exactly pure Cuba plays. Supposedly they owned COPA, but being a closed-end fund, it has no transparency as to what it currently owns.


    The Cuba investment play is exciting. Sometime in the future, the scenery will change. Perhaps the Castros or whoever takes their place becomes more pragmatic and be more like the Chinese communists, promoting their own brand of capitalism. I am hoping that this will take place. The Cuban people have suffered enough. Migrating Miami to Havana is exciting. And it would be absolute heaven for car collectors.


    JE comments: I'll probably need a tutorial on closed-end funds. Ric?


    One slight correction from this old-car aficionado. Cuba's classic cars are fun to look at, but the vast majority have been hopelessly "Frankensteined" with Russian truck engines, body patches from scrap metal, wooden bumpers, and the like.  They won't be that desirable to collectors, and sadly, they will disappear altogether as the commercial relations with the US improve.  Expect the boatloads of second-hand Ford and Chevy trucks to set sail soon.

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    • Trade Liberalization and the Law in US-Cuba Relations (Timothy Ashby, Spain 12/20/14 6:49 AM)
      I have followed the WAIS discussion about Obama's bold decision to restore full diplomatic relations with Cuba. First, a comment on Ric Mauricio's post of 19 December: Most of the Cuban hotels are owned by government holding companies such as Gaviota and operated by Melia, etc. The Cuban government plans to hand over management of some of these hotels to US hotel chains, provided that they participate in the development of new hotels and resorts in different parts of the island (e.g. away from Havana and Varadero), to assist economic development and employment.



      Restoring diplomatic relations with Cuba is just the first step to end the Cuban trade embargo. The President has the power to liberalize trade and travel to the island.



      If Obama is serious about helping Cuba's private sector--which even hardline Congressional critics claim to support--he could start by using his authority to allow certain Cuban exports to the US. Ironically, we are a major exporter of goods to Cuba, yet--with few exceptions--Cuban imports are banned despite the fact that many agricultural products, including tobacco, are produced by private Cuban farmers.

      Although US laws--especially the Helms-Burton legislation--generally prohibit the import of Cuban-origin goods into the United States, exceptions can be "specifically authorized by the Secretary of the Treasury by means of regulations, rulings, instructions, licenses or otherwise." Actually, the Helms-Burton law may be Obama's "secret weapon" to eliminate large sections of the trade embargo, because it codified the President's licensing power.


      In 1999, Ambassador James Dobbins, National Security Council (NSC) Senior Director for Interamerican Affairs in the Clinton administration, said that in the NSC's interpretation Helms-Burton merely delineated where a president could alter embargo-related licensing as required. Richard Nuccio, a senior Cuban policy advisor in the Clinton Administration stated, "When President Clinton signed the Helms-Burton law, his administration issued a statement saying that it does not restrict the right of the executive branch to make foreign policy. In its own view, the administration has the legal authority to make any changes in the embargo that involve regulatory powers, and that is just about everything."


      Obama could exercise executive authority via a "Presidential Determination" (a document issued by the White House resulting in an official policy of the executive branch) to allow certain types of Cuban-origin goods into the United States, particularly when such authorizations could be justified as providing support for the Cuban people or democratic change in Cuba.


      The US General Accounting Office (GAO) conducted detailed reviews of the frameworks for key statutes governing Cuban sanctions. The resulting reports concluded that (i) the president still maintains "broad discretion" to make additional modifications to Cuban sanctions; and (ii) prior measures, implemented by the executive branch have had the effect of easing specific restrictions of the Cuba sanctions and have been consistent with statutory mandates as well as within the discretionary authority of the president. Following in Clinton's footsteps, Obama has already exercised that authority to ease regulations implementing the Cuba sanctions program. A wide range of specific actions are legally available that the President could take to further ease specific provisions of the embargo.


      In 1998, the House Committee on Government Reform and Oversight requested that the GAO examine the White House's actions to determine whether they were consistent with Cuban sanctions laws. The GAO concluded that these were legal and that the President has "a great deal of discretion in making changes to embargo restrictions."



      JE comments:  I never knew that Helms-Burton provided an executive loophole, which according to Tim Ashby's interpretation, empowers Treasury to allow any Cuban import it deems fit.


      Our two WAISer Tims, Ashby and Brown, have more experience in Cuba than anyone else in WAISworld.  I'm very happy that they are both on board to offer their expertise during this time of historic change.

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      • Does Helms-Burton Allow an Executive Loophole? (Patrick Mears, Germany 12/21/14 6:24 AM)
        In response to Tim Ashby (20 December), I just reviewed the text of the Helms-Burton ("Libertad") Act and am not sure that Tim is correct in his statement about the exceptions in this statute that would permit imports of Cuban goods. Section 102 of the Act reaffirms prior laws providing for the economic embargo of Cuba subject to section 204 of the Act. Section 204 permits the President to suspend the embargo for 6 months at a time by sending a notice to Congress with his determination that there is a proper transition government in Cuba that, among other things, does not include either Fidel or Raúl Castro.

        I did not see in this Act the language quoted by Tim, but I didn't go through the statute line-by-line. It may be that this language is from other legislation and, if so, I would appreciate knowing about it--I intend to teach a unit on this embargo and what's now happening re: Cuba-US ties during my upcoming international trade law course at Mannheim University.


        I hope that you are enjoying Mexico City.


        JE comments: I hope the Two Tims of WAIS (Ashby and Brown) will respond. I have never actually read the text of Helms-Burton, but I cannot see the late Senator Helms allowing such a loophole to creep into the Act. The president at the time was Bill Clinton.


        Mexico City has been an unforgettable experience, although I was a bit under the weather yesterday.  Today, we're off to Xochimilco, to spend a Sunday afternoon sailing around the historic lake and gardens.


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        • Helms-Burton and US Imports from Cuba (Randy Black, USA 12/23/14 5:36 AM)
          It appears that Patrick Mears and Tim Ashby are at odds regarding whether or not the president can alter terms of the Cuban embargo. I can see on-line that Tim has written previously on these matters elsewhere. I trust his legal judgment. (https://www.cubastandard.com/?p=11972 ).



          Moreover, I also found the following study from The Brookings Institution that seems to verify Tim's position.



          The document's relevant excerpt and URL at the end:



          Presidential Authority To Modify Economic Sanctions Against Cuba

          A legal analysis prepared at the request of the Cuba Study Group and released in connection with a forum on US-Cuba Relations at The Brookings Institution, 15 February 2011



          by Stephen F. Propst, Partner

          Hogan Lovells US LLP



          VI. Conclusion



          The President maintains broad authority and discretion to significantly ease specific provisions of the Cuba sanctions regime in support of particular US foreign policy objectives recognized by Congress, including the provision of humanitarian support for the Cuban people and the promotion of democratic reforms. Presidents Clinton, Bush and Obama each have exercised that authority to ease certain provisions of the regulations implementing the Cuba sanctions program. As indicated above, however, there remains a wide range of specific actions that the President could take to further ease specific provisions of the Cuba sanctions, consistent with statutory mandates.



          III. Statutory and Regulatory Support for Presidential Authority to Modify Cuba Sanctions



          Notwithstanding this framework of successive federal statutes mandating sanctions against Cuba, the President retains broad authority to significantly modify and even ease specific provisions of the Cuba sanctions. This conclusion is supported by two separate reports prepared by the US General Accounting Office ("GAO"), following detailed reviews of the statutory framework and regulatory actions taken by the executive branch since the

          enactment of Helms-Burton in 1996.



          Specifically, the reports prepared at the behest of Congress in 1998 and in 2009 concluded that (i) the President still maintains "broad discretion" to make additional modifications to the Cuba sanctions; and (ii) prior measures, implemented by the executive branch that have had the effect of easing specific restrictions of the Cuba sanctions, have been consistent with statutory mandates and within the discretionary authority of the President.



          The statutory and regulatory provisions supporting the President's authority to modify the Cuba sanctions include the following:



          • Article II, Section 2 of the United States Constitution, which vests broad powers in the President to conduct the foreign affairs of the United States.


          • Section 602(a) of the Foreign Assistance Act and Section 5(b) of TWEA (under which the CACR was established), which grants broad authority and discretion to the President to establish and make changes to embargoes established thereunder.



          • Paragraph 2 of Proclamation 3447, which explicitly grants authority to the Secretary of Treasury to make such exceptions by license or otherwise to the prohibition on imports from Cuba as he determines to be consistent with the effective operation of the embargo.



          • Paragraph 3 of Proclamation 3447, which explicitly authorizes the Secretary of Commerce to "continue, make, modify or revoke" exceptions to the prohibition on all exports to Cuba.



          Source: http://www.hoganlovells.com/files/Publication/57d34e80-51b8-4ee0-ae64-750f65ee7642/Preview/PublicationAttachment/55896b90-840a-42bf-8744-752a7a206333/Cuba%20Aritcle%20FINAL.pdf


          JE comments:  Tim Ashby (next in queue) has also sent a response to Pat Mears.


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        • Helms-Burton and US Imports from Cuba (Timothy Ashby, Spain 12/23/14 5:50 AM)
          I appreciate Patrick Mears's question of 21 December, and am happy to provide the following extrapolation (which was based on a memo I prepared for the State Department). I must note that Helms-Burton in no way permits the import of Cuban goods. However, interpretation of the statute by the various parties and agencies cited affirms the licensing powers of the Executive Branch.

          Legal Framework for Presidential Authority to Allow Cuban Imports



          The US General Accounting Office (GAO) conducted detailed reviews of the frameworks for seven key statutes that govern Cuban sanctions.[1] The resulting reports concluded that (i) the president still maintains "broad discretion" to make additional modifications to Cuban sanctions; and (ii) prior measures, implemented by the executive branch have had the effect of easing specific restrictions of the Cuba sanctions and have been consistent with statutory mandates as well as within the discretionary authority of the president.[2] The absence of such explicit statutory provisions in other areas suggests that Congress did not intend to prohibit the executive branch from issuing general or specific licenses to authorize certain transactions with Cuba when "such licenses are deemed to be appropriate and consistent with US policies."[3]



          The President maintains broad authority and discretion to significantly ease specific provisions of the Cuba sanctions regime in support of particular US foreign policy objectives recognized by Congress, including the provision of humanitarian support for the Cuban people and the promotion of democratic reforms. Presidents Clinton, Bush and Obama each have exercised that authority to ease certain provisions of the regulations implementing the Cuba sanctions program. As indicated above, however, there remains a wide range of specific actions that the President could take to further ease specific provisions of the Cuba sanctions, consistent with statutory mandates.


          The statutory and regulatory provisions supporting the President's authority to modify the Cuba sanctions include the following:



          · Article II, Section 2 of the United States Constitution, which vests broad powers in the President to conduct the foreign affairs of the United States.

          · Section 602(a) of the Foreign Assistance Act and Section 5(b) of TWEA (under which the CACR was established), which grant broad authority and discretion to the President to establish and make changes to embargoes established thereunder.[4]

          · Paragraph 2 of Proclamation 3447, which explicitly grants authority to the Secretary of Treasury to make such exceptions by license or otherwise to the prohibition on imports from Cuba as he determines to be consistent with the effective operation of the embargo.

          · Paragraph 3 of Proclamation 3447, which explicitly authorizes the Secretary of Commerce to "continue, make, modify or revoke" exceptions to the prohibition on all exports to Cuba.

          · Section 515.201 of the CACR that was in effect in March 1996, which prohibits dealings in property in which Cuba or Cuban nationals have an interest, but explicitly references the authority of the Secretary of Treasury to establish exceptions to the prohibitions by means of regulations, rulings, instructions, licenses, or otherwise.[5]

          · Section 515.533 of the CACR that was in effect in March 1996, which provides a "general license" authorizing exports to Cuba that have been specifically licensed or otherwise authorized by the Department of Commerce (but subject to certain conditions on the financing of such export transactions).[6]

          · Section 515.801 of the CACR that was in effect in March 1996, which sets forth the authority of the Secretary of Treasury to grant general and specific licenses for transactions otherwise prohibited under the CACR.[7]

          · Section 1703 of the CDA, which states the US Government's policy of seeking a peaceful transition to democracy and resumption of economic growth in Cuba through the careful application of sanctions directed at the Castro government and support for the Cuban people.[8]

          · Section 1705 of the CDA, which further elaborates upon the policy of providing support for the Cuban people through specific types of authorized activities. [9]

          · Sections 2 and 3 of Helms-Burton, which reaffirm the objective of providing support for the Cuban people.[10]

          · Section 102(h) of Helms-Burton, which codified the CACR as it existed in March 1996, including the authority of the Secretary of Treasury to exercise licensing authority.[11]

          · Section 109(a) of Helms-Burton, which authorizes the President to "furnish assistance and provide other support for individuals and independent nongovernmental organizations to support democracy building efforts for Cuba."[12]



          It is also worth noting that when Congress intended to prohibit the executive branch from authorizing particular categories of transactions with Cuba, it included explicit statutory provisions for that purpose. For example, as noted above, Section 1706(a) of the CDA specifically prohibits the Department of the Treasury from issuing a license authorizing foreign subsidiaries of US companies to engage in certain trade with Cuba.[13] Similarly, Section 103 of Helms-Burton prohibits US persons and US agencies from knowingly making a loan, extending credit or providing other financing for the purpose of financing transactions involving property confiscated by the Cuban government, with an exception only for financing by a United States national owning a claim to the property in connection with a transaction permitted under US law. Section 515.208 of the CACR implements this statutory prohibition, without any language granting the Secretary of Treasury the authority to grant further exceptions to this prohibition.[14] The absence of such explicit statutory provisions in other areas suggests that Congress did not intend to prohibit the executive branch from issuing general or specific licenses to authorize transactions with Cuba when such licenses are deemed to be appropriate and consistent with US policies.



          Following Clinton Administration changes to the CACR in 1998, the House Committee on Government Reform and Oversight requested that the GAO examine the changes to determine whether they were consistent with US statutes requiring the Cuba sanctions. In a December 1998 report to the House Committee, the GAO determined that the changes were consistent with US law, including provisions giving the President discretion to authorize transactions in support of humanitarian assistance to Cuba. Citing Section 5(b) of TWEA, the GAO concluded that the President has "a great deal of discretion in making changes to embargo restrictions."[15]



          The 1998 GAO report also cites an October 16, 1998 OFAC letter (co-signed by the State Department's Office of Cuban Affairs) stating that "OFAC interprets Section 102(h) of [Helms-Burton] to permit the continued exercise of reasonable licensing authority in OFAC's implementation of the prohibitions contained in the CACR as of March 1, 1996, and in the CDA and [Helms-Burton]." After acknowledging the Conference Report language quoted above with respect to Congress's intent in codifying the CACR, the OFAC letter further states that Helms-Burton does not "rule out reasonable adjustments to the licensing regime consistent with the limitations on suspension or termination as described above." By way of explaining its decision to reinstitute the general license for remittances, in spite of the "sense of Congress" provisions in Helms-Burton relating to prior conditions for doing so, the OFAC letter concluded that such decisions remain "subject to Presidential discretion in weighing the humanitarian purpose of allowing US residents and citizens to support family members in Cuba against the resulting flow of hard currency to Cuba."[16]


          In its conclusions, the GAO agreed with OFAC's position and found that OFAC has the authority to make changes to specific provisions of the CACR, including changes that effectively loosen the sanctions in furtherance of humanitarian considerations, under its general licensing authority. [17]


          Notes:


          [1] Stephen F. Propst, Presidential Authority To Modify Economic Sanctions Against Cuba, (Hogan Lovells US LLP, February 15, 2001) 2,

          [2] United States General Accounting Office, U.S. Embargo on Cuba: Recent Regulatory Changes and Potential Presidential or Congressional Actions, GAO-09-951R (September 2009), http://www.gao.gov/products/GAO-09-951R ; and Cuban Embargo: Selected Issues Relating to Travel, Exports, and Telecommunications, GAO/NSIAD-99-10 (December 1998), http://www.gao.gov/products/NSIAD-99-10 .

          [3] Propst, Presidential Authority, 9.

          [4] 22 U.S.C. § 2370; 50 U.S.C. App. § 5(b)

          [5] 31 C.F.R. § 515.201 (1996).

          [6] 31 C.F.R. § 515.533 (1996).

          [7] 31 C.F.R. § 801 (1996).

          [8] 22 U.S.C. § 6002

          [9] 22 U.S.C. § 6004

          [10] 22 U.S.C. §§ 6021 and 6022

          [11] 22 U.S.C. § 6032(h).

          [12] 22 U.S.C. § 6039(a).

          [13] 22 U.S.C. § 6005

          [14] 31 C.F.R. § 515.208

          [15] 1998 GAO Report at p. 2

          [16] Letter dated October 16, 1998 from Office of Foreign Assets Control to United States General Accounting Office, as reproduced in 1998 GAO Report at p. 30

          [17] 1998 GAO Report at pp. 18-19



          JE comments:  There is some overlap here with Randy Black's post of earlier today, but I am convinced that Helms-Burton provides a good deal of Executive discretion when it comes to allowing US imports from Cuba.  As my non-legal mind might phrase it, it's illegal to import stuff from Cuba, unless the President (or Treasury, under the President's direction) says it's OK.


          My thanks to Tim Ashby for this detailed response.


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    • Closed-End Funds; from Ric Mauricio (John Eipper, USA 12/20/14 5:22 PM)
      JE: Ric Mauricio kindly responds to my request (19 December) for a primer on closed-end funds:

      Closed-end funds (CEFs) are a hybrid-type investment vehicle, sort of cross between a mutual fund and an exchange-traded fund. The mutual fund aspect of a CEF has the fund issuing portfolio reports every six months, and most are hopelessly outdated, and even subject to window dressing. OK, now what is window dressing? It is when a fund manager, knowing that the portfolio report is coming out, sells his/her losers and loads up on winning stocks. So when an investor looks at his portfolio, he/she sees a lot of great-looking names, but doesn't know when they were purchased, or even if the fund even has those stocks in its portfolio any more. I have often questioned the ethics of this, but I have often been told, "everyone does it in the mutual fund and money management business." Ouch. This doesn't paint a pretty picture of the industry, does it? OK, so both the mutual fund and the closed-end fund lack transparency.


      The exchange-traded fund (ETF) aspect of a closed-end fund is that a specific number of shares are issued and floated on the stock markets. An open-ended mutual fund issues new shares as investors buy into the fund. Thus, when there is a greater demand for the CEF, the price of the stock is boosted higher (and vice versa). But the value of the stocks within the fund marches to its own drummer, so its value is called the net asset value.


      As one can see in the case of the closed-end fund CUBA, on one day it went from a 3% discount to its net asset value to a 30% premium to its net asset value. At that premium, one can say that it has now become a speculative investment and subscribes to the greater fool theory. And CUBA, the CEF, is as Cuban as Mark Cuban, the owner of the Dallas Mavericks. He's not; his grandparents were Russian immigrants. Wow! Talk about greater fools.


      Someone said that those hotel chains I mentioned could be overpaying for properties in Cuba. But one does not become the biggest and most successful global operators by overpaying for properties. These companies are very careful in how they structure deals, especially in countries like China or Vietnam, where the land is never owned by the individual (companies). They also do not overleverage (there is a point where too much leverage can prove detrimental, should events not go right). And they do measured improvements. Examples of companies that have overleveraged or over-improved are the casino operators. Wynn and Sands are having challenging times. Hmm. I am sure at some time in the future, these companies will try to place a casino in Havana, just like in the old days. But for now, I am not gambling on the gamblers.


      As in the US and the UK,, car collectors are looking for that diamond in the rough hidden away in that forgotten garage. Auto restoration is much like investing. One cannot overpay and the cost of restoration, the time it would take for restoration, and the ultimate selling (exit) price must be correctly assessed. There never seems to be a lack of treasures, whether it be classic automobiles or stock certificates. But the excitement is in the hunt.


      You gotta love this life.


      JE comments:  For classic cars, the axiom is that a full restoration nearly always costs more than the car will be worth after it's restored.  The trick, therefore, is to purchase somebody else's dream.


      My thanks to Ric Mauricio for this crystal-clear explanation of CEFs.  Returning to Cuba, how long before the casinos return to Havana?  John Heelan raised this question off-Forum a few days back.

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      • Will the Casinos Return to Havana? (Timothy Ashby, Spain 12/21/14 6:43 AM)
        This is in response to John's question: how long before the casinos return to Havana?

        Several years ago I represented a client who owned a major casino hotel in Las Vegas and who wanted to explore opening a '50s-themed casino/hotel in Havana when legally able to do so. The Cuban government told me unequivocally that the hotel would be welcome but casinos were taboo due to the multigenerational antagonism towards the gangsterism of the Batista era. To (mis)quote James Bond, never say never again, so casinos could well return to Cuba, but I wouldn't make plans for a Casino Royale redux any time soon.


        (By the way, there is a marvelous antique car museum in Havana. I've been told that the Cuban government elite has already bought up all the restorable old cars across the island, and I have heard that a few have been sold abroad).


        JE comments:  In my pre-WAIS life (1998), I visited the Sala de Transporte museum in Havana, which among other historic vehicles has the 1960 Chevy that belonged to Ernesto Guevara--the guy who put the "Che" in Chevrolet.  I wrote a brief piece for Autoweek magazine.  I couldn't find the text on-line, but here is some additional info:


        http://connection.ebscohost.com/c/articles/707198/sala-de-transporte


        If you'd like a hard copy of the article, drop me a line.


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    • Trammell Crow, Developer and Hotelier (Randy Black, USA 12/21/14 5:25 PM)
      Ric Mauricio's post on 19 December, while a fascinating overview of the global hotel and resort business as it might relate to Cuba's tourism business, seems to miss a tiny bit when he refers to Wyndham Hotels and Resorts.



      Ric wrote, "If I were Wyndham (WYN), founded by Trammell Crow in Dallas, couldn't I just add a few more hotels to my hundreds of hotels around the world?"



      While Trammell Crow founded the hotel company, his name has not been connected with the hotel and resort operations for years. As a result of various changes in corporate directions and economics, by 1999, the hotel operation was bankrupt and sold off to two investment groups unrelated to the Crows.



      On that sad note, it gives me a chance to mention my admiration and distant connection with the great Trammell Crow, who I knew socially and professionally for more than four decades.



      Mr. Crow, born in 1914 in Tyler, Texas, was a self-made man. He was the 5th of 8 children raised in a rented 1-bedroom home in a poor East Dallas neighborhood. Mr. Crow worked his way through high school in Dallas and joined the Navy at the outbreak of WWII. Here's where it gets interesting to me. The following abbreviated story is what I've pieced together from discussions from the four key players who developed much of Dallas between 1945 and about 1990.



      When Mr. Crow returned from the war to Dallas in 1945, he teamed up with another land developer, John Stemmons, and another Navy veteran that he met along the way. These three men from humble backgrounds, began to develop Dallas.



      Mr. Crow and Mr. Stemmons were the men who developed the vacant miles of land near downtown Dallas and began to put in the warehouses and office complexes along a developing freeway, later I-35, that ran from Houston, through Dallas and eventually to Minneapolis.



      J.M. Johnson, who learned to twist wires in the Navy (his words), installed the electrical, heating and A/C systems in what became the Trinity River Industrial District and the Brookhollow Industrial District. Mr. Johnson told me, "Trammell got the concrete poured and put up the walls for the warehouses, and I wired 90 percent of them from Downtown Dallas out to LBJ (I-635). When we ran out of land along Stemmons Freeway (I-35), we turned east for another ten miles."



      Mr. Johnson remains a good and close friend. Ben Carpenter, also a land developer from a ranching family in nearby Irving, Texas, made it a foursome.



      Between the four, according to Mr. Johnson, they developed the land, financed the operations, built the buildings and leased or sold probably 90 percent of the business developments branching out from the west side of downtown Dallas to the suburbs and then east along the Interstate loop 635 that surrounds Dallas.



      I tell you that so I can tell you this: About 1980, when I was attempting to develop my commercial photography business, on a hot August day, I was posing a bridal portrait along Turtle Creek Park in the inner city suburb Highland Park. I knew that Mr. Crow lived close by, having been in his home on several occasions during high school. Along the sidewalk he came with is standard size poodle. He stopped, his bald head pouring off sweat, and complimented the bride-to-be and issued a polite greeting to me by name and passed along his regards to my parents.



      He disappeared across the street and into his home. Shortly, he returned with a tray, a silver bucket of ice, two glasses and a couple of bottles of Coke. "Just leave the tray on the bench under the tree over yonder when you leave, I'll get it directly."



      A few years later, when I was photographing Mr. Crow's 6-year-old grandson, the son of Trammell S. Crow (one of Mr. Crow's six children), I related the story to Trammell S.



      The younger Crow said, "I get those stories a lot from folks who've known my father. It is a pleasure and never gets old hearing them. Thanks."

      In 1986, according to Wikipedia, "The Wall Street Journal... called Crow the largest landlord in the United States. The Journal said the company he founded was then the largest developer in the nation. Crow once had interests in nearly 300,000,000 square feet (28,000,000 m2) of developed real estate, comprising eight thousand properties in more than one hundred cities. Crow's holdings were said to be much larger than those of the better-known William Zeckendorf and Donald Trump and include hotels, hospitals, residential developments, and--just as in the early days of the company--warehouses."


      At Mr. Crow's death from Alzheimer's in 2009, he'd been married (to the same woman) for nearly 67 years. While I photographed Mr. Crow and most of his family at one time or the other, my favorite was when I photographed him introducing Ronald Reagan at the 1984 National Convention in Dallas.


      JE comments:  There's a book in Randy Black's many anecdotes of the Dallas greats.  The Trammell Crow story is no exception.  And what's the deal with hoteliers, who tend to have bizarre first names?  In addition to Trammell Crow, there's Willard Marriott of the eponymous chain, and my favorite of all, Kemmons Wilson, whose Holiday Inn chain began the idea of a reliable, uniform, hotel "brand."

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