Hi David, I have recently engaged Mercan for the GV options in Portugal. I would really appreciate your info in dealings with them so far. Thanks Christo
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I’ll add a “me too”; I would love to hear others’ perspectives on Mercan.
I received several documents today–nicely itemized with actual numbers!–tabulating the expected costs and yields of the various options. The 280K projects have fixed overhead costs of several percent and return no yield other that return of capital. The 350K projects tend to yield 1-2%, after subtracting fixed costs, plus guaranteed return of capital. There is one project that offers a nominal 5-10% yield, minus unknown expenses, rather than the 3% typical of other projects in the same cost band; however, it does not offer guaranteed buy-back.
What do you all think about these various projects, particularly in comparison to the investment fund option? I would be most comfortable if I had clear insights into the financial health of these firms and projects following the financial stress and disruption of COVID. If anyone has a well-calibrated crystal ball to predict the future, do please share what you see! 
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The Mercan project comparison spreadsheet lists “Annual income” for the Porto Broadway Sheraton project as 5-10%, which seems like more of an estimate or target than a guarantee. I infer that this is a variable rate of return, in contrast to the fixed or zero return of the other options. The sheet notes that this earns the highest annual income while also incurring the highest total costs, and has no guaranteed buyback in contrast to all other projects on the roster.
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Hi David, I too would love any info you could provide on your experience with Mercan. Thank you!
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I spoke with them also. It is a potential option for some people, and I understand why. We have chosen not to pursue them further but here are my thoughts:
- they seem a good, relatively low risk project. Of course the name brand hotels could pull out or the construction company could go broke. They have 12 year deals with Marriott for instance and construction is proceeding on both their current projects so I see this as unlikely. My concern is they also seem like essentially a time-share and we all know how bad those can be.
- The Marriott in Porto will give 3%/year and 1 week stay/year so some return on an annual basis is good. Note, this only begins one construction is completed so nothing for the Marriott Porto project for 2+ years.
- as opposed to a fund investment, you do have to pay the RE fees and taxes as you would for any other RE purchase. This is over 10k.
- I like their potential “guarantee” (for what this worth) that they will buy your share back after 6 years or if your GV falls thru. The Broadway project does not give this guarantee FYI.
- The Hilton is a lower cost option but seems far out of the way and is farther from actually being built.
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Hi Larry,
I just find this topic re Mercan projects cos i have spent too much time on fund option over past a few weeks.
I got Mercan’s Lapa hotel info from various different consulting firm ,so it seems Mercan might have spent more than their peers on advertisement. I hav yet reviewed Lapa appraisal report but my impression is the company looks to be experiences on immigrant projects. I
I like
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buy back guaranteed term
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cooperated with Marriott, which has credentials in hotel sector.
I keep Questions on below:
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would tourists industry be back as normal level it before after Covid -19 ? Hotel will open in 2022, the presentation estimates the occupancy rate will be 68%-70%,which sounds too aggressive based on current mkt perspectives
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who would be real capable one to provide back-back guarantee? they said it’s their company in Porto, a developer will provide guarantee. I am so curiously if such promise would be carried out at the end of 5-6yr. The key uncertainties include 1)if the developer’s refinancing amount might have large portion against its capital. If so, buy-back guarantee is too hard to be carried out 2) The risk on construction. They claimed the construction would commence in Oct 2020(I really suspect such timetable under current circumstances ) . even if the construction is kicked off as they claimed on proposal, the whole project would largely depend on if budget capital is fully raised , say around 50Mn . They said they have attracted half of total investors(160), but how’s going on next a few months?
Anything new info you could share? thanks lot!
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HI Olga - wondering if you could share the lawyer contacts from Melanie with me. thank you!!
Hi @mtrom - I’d love to have your law firm contacts for the D7 visa as well.
Thanks In Advance
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Hi David,
I have looked deeply on Mercan’s Lapa hotel in Porto. It would be grateful if you can share your insights on engaging with Mercan via DM. thanks lot!
Hi David
I’m interested in Lapa Hotel and starting talks with Mercan
I was wondering if you could share your experience
Thanks
Steve- did you get any replies to this? Anything to share?
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I am liking the Mercan route- when considering La Vida & Mercan. The option of a hotel (Marriott brand) vs. something to renovate and rent myself seems like a clear winner there. Anyone know where the Lapa project is in terms of $$ raised to date?
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Here is what I received today from Mercan:
Our first project is the Lapa Marriott Renaissance hotel and convention center, located in the heart of Porto. This project requires an investment of 350,000 Euros, while providing an annual return of 3%. The unique feature of this investment is that it provides a guaranteed Buy-Back of your investment after 5 years.
The second project is in Évora, a UNESCO World Heritage site, located one hour east of Lisbon. This project will be a Hilton Garden Inn, requiring an investment of 280,000 Euros. This project will also have a guaranteed Buy-Back of your investment after 5 years.
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By my study on Lapa Renaissance hotel, a key challenge concerns me is the risk on planning and construction delay due to the pandemic.
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for that reason, i was taking a more serious look at the Evora property. Less capital outlay, no dividend (less headache around reporting gaines, PFIC, etc). So basically that would be an interest free loan of 280k in exchange for GV. I am unsure at this point of how much has been raised.
I did a look on Evora hotel. Yes, the total investment size and initial capital of investors are less than Porto project. However, it would face the same challenge as well as Porto does on construction side.
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I received this today- changes on the Evora project.
"Although construction was due to start November 2020 as you mentioned, the construction for Évora will now start in January as we just signed the agreement with Hilton to have that property become a Hilton property and some changes to the design were needed in order to adjust to Hilton’s requirements. We do not expect that delay to have a major effect on completion dates.
The hotel is currently around 1/3 sold out. This project is not raising capital to be built as we already purchased the land and the project is in development stage. We then sell off the project in portions for the purpose of the Golden Visa. We expect to sell out the project as all interested investors must have their files submitted before construction is complete in order to qualify under the rehabilitation category."
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wasn’t it supposed to be a Hilton property all along?
that’s the thing that concerned me and others about the project - what if it doesn’t sell out?
How does the 5 year GV timeline work with something like Evora? Is it from time of investment or time of operation or time of construction or something else?
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