While re­tail store own­ers and busi­ness groups con­tin­ue to push back against the re-im­po­si­tion of the tax on com­mer­cial prop­er­ties, the chief ex­ec­u­tive of Home Con­struc­tion Ltd (HCL), Richard Le Blanc ar­gues tax­ing com­mer­cial prop­er­ties in Port-of-Spain is one way to con­tribute to the re­vi­tal­i­sa­tion of T&T’s cap­i­tal.

While there are cer­tain parts of T&T where re­tail has died, that is not to be con­fused with Port-of-Spain, which has suf­fered a degra­da­tion of some of its prop­er­ties, Le Blanc ar­gues.

“Re­tail is not dead. Port-of-Spain as a re­tail des­ti­na­tion has now be­come, in my hum­ble view, out­dat­ed. Peo­ple just don’t go there to shop as they once used to do,” said Le Blanc.

The proof of his the­o­ry, the re­al es­tate ex­ec­u­tive said, is the num­ber of peo­ple who walk the streets of Port-of-Spain every day and their pur­chas­ing pow­er.

Ques­tioned about the num­ber of va­cant lots in Port-of-Spain in a Busi­ness Guardian in­ter­view last Thurs­day, Le Blanc re­spond­ed with a ques­tion of his own: “Ask your­self the ques­tion: Are there va­cant lots be­cause there is a lack of pur­chas­ing pow­er on the streets or is it va­cant be­cause of the de­cline of the phys­i­cal ameni­ties of the city?”

He does not think there is a lack of pur­chas­ing pow­er in Port-of-Spain

“Let us as­sume Port-of-Spain has 100,000 peo­ple work­ing in it every day. Take those same 100,000 peo­ple with their same in­come and put them on the high street in Lon­don. Or put them in New York or even down­town Mi­a­mi, a bustling, great-look­ing city with all of the ameni­ties. Let’s see how much of those peo­ple shop and spend mon­ey there every day ver­sus Port-of-Spain,” he said.

T&T’s cap­i­tal is not psy­cho­log­i­cal­ly en­tic­ing, he ar­gues, mak­ing the point that the rea­son some peo­ple pre­fer to shop at, for ex­am­ple, The Falls at West Mall is be­cause the en­tire en­vi­ron­ment con­di­tions the minds of shop­per in a cer­tain way.

“And if I take you and put you in Port-of-Spain, that would con­di­tion your mind in an­oth­er way.”

And he agrees that what the cap­i­tal lacks is a de­vel­op­ment vi­sion.

Cit­ing the his­to­ry of T&T’s cap­i­tal, Le Blanc said if stores like Wool­worth’s, Stevens & John­sons and Kir­palani’s were to re­turn to the city, and it was beau­ti­fied, Port-of-Spain’s for­tunes would turn­around quick­ly.

“One of the main con­trib­u­tors for the degra­da­tion of a city is a lack of prop­er­ty tax,” said Le Blanc, adding: “The main func­tion of a prop­er­ty tax is to raise rev­enue. But prop­er­ty tax al­so per­forms an­oth­er func­tion, which is that it en­sures that the high­est and best use is put to a place.”

He used the West­ern Main Road in St James as an ex­am­ple.

“How many derelict prop­er­ties do you see on that stretch? Quite a few. If the own­ers of those prop­er­ties were pay­ing the cor­rect prop­er­ty tax—if they were pay­ing tax that was ap­pro­pri­ate and jus­ti­fi­able for the West­ern Main Road, where there are thou­sands of cars dri­ving through—do you think any of those build­ings would be derelict, un­used and in a state of dis­re­pair?

“As a mat­ter of fact, quite the op­po­site would hap­pen be­cause re­gard­less of what busi­ness is lo­cat­ed on Champs-Élysées in Paris, the prop­er­ty tax that is paid to be there dic­tates that the busi­ness has to be best use. Not nec­es­sar­i­ly high end, be­cause best use is not al­ways high end. You would see Guc­ci and Pra­da on Champs-Élysées, but you would al­so see the mid­dle-tier brands or a restau­rant or cafe,” said Le Blanc.

OWP not sold out

As CEO of HCL, Le Blanc is re­spon­si­ble for the man­age­ment of Long Cir­cu­lar Mall and Trinci­ty Mall, a land­bank of thou­sands of acres and One Wood­brook Place (OWP)—the 432-unit res­i­den­tial and com­mer­cial com­plex sit­u­at­ed on the bor­der of Wood­brook and St James.

OWP’s con­struc­tion was com­plet­ed in 2010, and its to­tal project cost is close to $2 bil­lion, Le Blanc said.

“Re­mem­ber that peo­ple de­fine to­tal project cost dif­fer­ent­ly. For us, to­tal project cost in­cludes the con­struc­tion of the com­plex, fi­nanc­ing costs, in­ter­est, soft costs and hard costs, which would be close to $2 bil­lion,” said Le Blanc, adding that the con­struc­tion cost “could have been be­tween $1.4 and $1.5 bil­lion.”

Asked whether the project had re­cov­ered its con­struc­tion cost with the sale of 392 units, Le Blanc said: “One of the good things about re­al es­tate is this: Re­al es­tate is some­times called the for­giv­ing busi­ness. Even though you may lose on the ini­tial project cost ver­sus the price, OWP has a com­mer­cial com­po­nent of al­most 200,000 square feet and cur­rent­ly has 25 com­mer­cial ten­ants, in­clud­ing First Cit­i­zens, the Unit Trust Cor­po­ra­tion the Imax cin­e­ma as well as a num­ber of restau­rants and en­ter­tain­ment places.

“Gen­er­al­ly in T&T, over time, the val­ue of com­mer­cial re­al es­tate goes up. With that are rents and prof­its...even if there is a fi­nan­cial loss in the short term, the rental in­come side usu­al­ly car­ries you in the long term in terms of ac­qui­si­tion.”

From its com­mer­cial ten­ants, HCL gen­er­ates about $15 mil­lion a year, said the re­al es­tate ex­ec­u­tive.

Le Blanc said while the debt/eq­ui­ty split for the OWP project was com­plet­ed be­fore his time, fi­nanc­ing of the fa­cil­i­ty “could have been 80 per cent debt and 20 per cent eq­ui­ty.”

HCL’s eq­ui­ty in the project came from its ac­qui­si­tion of the land on which the de­vel­op­ment is lo­cat­ed from the Port-of-Spain City Cor­po­ra­tion. The ac­qui­si­tion cost of the land—which in­clud­ed the re­lo­ca­tion of the Star­lift Steel Or­ches­tra and the fa­cil­i­ty on the Fore­shore for garbage col­lec­tion—“could have been close to $40 or $50 mil­lion,” said Le Blanc.

HCL bor­rowed $699 mil­lion from First Cit­i­zens se­cured by a first mort­gage over the lands of OWP. The pro­ceeds of the fa­cil­i­ty were used to fi­nance the con­struc­tion of the de­vel­op­ment, ac­cord­ing to the CL Fi­nan­cial 2007 an­nu­al re­port.

Of the OWP’s orig­i­nal stock of 432 units, 40 re­main un­sold and part of Le Blanc’s cur­rent re­mit is sell those apart­ments.

Of the 40 un­sold units, 36 are three bed­rooms, with a sell­ing price of $3.5 mil­lion, and four are pent­hous­es, sell­ing for be­tween $4.5 mil­lion and $5.5 mil­lion. The com­plex has 30 pent­hous­es. If HCL is suc­cess­ful in sell­ing all 40 units, it would raise about $150 mil­lion.

The dri­ve to sell the units be­gan last No­vem­ber, first with an open auc­tion for four apart­ments in the fourth quar­ter of last year, out of which two apart­ments were sold.

“We de­cid­ed to start off with the auc­tion process so that we could test the mar­ket in terms of pric­ing and it came back spot on in terms of our ask­ing prices now. The auc­tion process gave us the con­fi­dence that the mar­ket is ready to get back in­ter­est­ed in OWP,” Le Blanc said.

Sales of OWP units are con­tin­u­ing through pri­vate treaty.

He said part of the rea­son for the un­sold units is that HCL’s par­ent com­pa­ny, the CL Fi­nan­cial group, col­lapsed in Jan­u­ary 2009, which caused un­cer­tain­ty about the fate of the com­plex.

“When that col­lapse took place, there was a great de­gree of un­cer­tain­ty that cloud­ed the en­tire group. Start­ing from the col­lapse, what au­to­mat­i­cal­ly hap­pened was a drop in the con­fi­dence lev­el and un­cer­tain­ty as to whether we would ever fin­ish One Wood­brook Place as a project. It start­ed with the col­lapse,” said Le Blanc.

An­oth­er rea­son he put for­ward for HCL’s in­abil­i­ty to sell the orig­i­nal stock of apart­ments is that every­time the gov­ern­ment changed, the board of HCL changed.

“Every­time this hap­pened, it was a new phase be­cause each new board would have its own di­rec­tion and vi­sion in terms of how they saw the re-emer­gence of HCL, as a sub­sidiary of CL Fi­nan­cial and Cli­co,” said Le Blanc. HCL is now owned 70 per cent by the liq­uida­tors of CL Fi­nan­cial and 30 per cent by the Gov­ern­ment.

The third rea­son he posit­ed for just over 10 per cent of OWP’s orig­i­nal units re­main­ing un­sold was be­cause be­tween 2018 and 2020, “there was a mass ex­o­dus of ex­pa­tri­ate rentals from Trinidad. You have seen many ex­pats go to Guyana.”

He ex­plained that one class of buy­er that OWP ap­pealed to orig­i­nal­ly was the pur­chase of units for the pur­pose of in­vest­ment.

“With the slow­down in ex­pat rentals, that is a con­tribut­ing fac­tor in ex­plain­ing the in­abil­i­ty to sell off all the apart­ments,” said Le Blanc.

And then came the COVID-19 pan­dem­ic in March 2020, which re­sult­ed in the T&T econ­o­my be­ing closed for a num­ber of years.