Moderator Reviews

[Ridley]

Ridleys' (First) Open Skies Company Review

Company: International Pilots Group
Home Page: www.ipgglobal.net
Description: A consortium of airline pilots, retirees and professionals that create one-step investment opportunities to benefit members of the airline industry.

Project/Opportunity:
They currently have a Condo/Hotel Project on Grand Cayman in the Cayman Islands. It’s a 102-unit beachfront Resort in the Cayman Islands. Phase I is 30 - 2 bdrm interval ownership units and Phase II started construction about a month ago. The units are sold fee simple (you own them completely) and can be purchased as studio, 1, 2, or 3 bedrooms. All of their projects focus on the airline industry, with most of the benefits enjoyed by airline personnel, due to the ease of travel, respect and the reputation we bring. (explained in more detail under benefits.) Membership to join the IPG is fee based, but is currently waived for anyone involved in aviation or an affiliation. The projects benefits are scaled to the group, meaning this project has specific benefits which were determined by the size of the group at the start of the project. As the group grows I would imagine leverage for more benefits due to the increase in the group size will help everyone involved. They seem to have a good grasp of what's important in an offshore investment, and there was no lack of information on the current project, including layouts, rental returns, permanent resident documents, etc. All in all, their Cayman project appears to be generally most beneficial to overseas pilots although there appear to be benefits to ownership from a straight return on investment and a vacation residence (But this is just my opinion). After chatting with them about future projects in other tax-advantaged areas of the world, they seem to understand the needs of their pilots’ base.

Benefits:
    Tax Benefits: With their first project being in the tax-haven of the Cayman Islands and offering permanent residency with ownership, pilots in certain high tax countries like, Canada, UK, Australia, New Zealand, Germany & S. Africa would benefit greatly from having a PRS in this jurisdiction.

    ROI: With the first half of the project completed in the form of the Reef Resort (Phase One), which is already built, owners can rent out any of their units (have them added to the hotels rental pool) to earn a reasonable return while they are not using their units. Also, from what I've read, (try Vault Magazine an excellent off-shore financial magazine) the return on prime oceanfront real estate on the island and this region has been amazing.

    Globetrotter: They have added the ability for each owner to trade his/her unit with other Interval ownership units around the world. (quote from website) Unique to this development, and for the first time ever in Cayman, is the ability of the owners (even though their units are fee simple) to trade time when their unit is not being occupied, through Interval International’s Time Share Exchange Program. This will allow the owner to vacation for weeks or months at other Interval International five-star resorts around the world. A typical trade would cost between $114 and $135, depending on location. Currently, Grand Cayman is one of the most sought after destinations in the world, giving owners great trading power.
Interval International’s other five-star trading partners include Hyatt, Westin, Marriott and Sheraton Resorts, to name only a few of the sixteen hundred resorts hosted by Interval (end quote)

    Amenities: Castaways' Cove has a lot of amenities, all 5-star, including (quote from website) three interconnecting seaside pools, attached whirlpool, fountains, lit dock, lit seaside tennis court, beachfront bar, oceanfront restaurant, fitness center offering Life Fitness training equipment, outdoor BBQ/Gazebo, the ease of a centralized charging account, 24 hour front desk (lobby) and security, a centralized switchboard, Ocean Frontiers on-site dive operation, mini-market, on-site concierge, liquor store, internet cafe and new beachfront bar and grill for casual dining and cocktails. (end quote)

    Beachfront Lifestyle: My last benefit, but one of my favorites is how they designed the units, (quote from website) All villas will be oceanfront with an unobstructed view of the ocean. A pool area with washrooms and a large pool deck will also be available for the Castaways’ owners. (end quote) White sand beaches, blue water, enough said.

    Visitors welcome: One of the nicer benefits to the airline industry, is the ability to reserve a unit for as little as $1000USD down, and then you can fly in and stay for a few days on them, to see if you like it.

Pros:
Too many to mention. You seem to have a solid group, good first project, lots of benefits, a nice start. I can't wait to see what you will do in the future. This is a solid opportunity for pilots and airline people. Even the vacation rentals/exchanges forum was great. But on to the Cons.

Cons:
All that good stuff being said, there are some major points that need to be addressed.
    Location. Being in the Cayman Islands, each person should weigh the benefits of the tax situation, and find out if it’s good for them to get a PRS (some US citizens may not benefit as much). Also there should be a little more information on just what is involved in becoming a permanent resident. There could be more information on how hard/easy it is to get to the Caymans from various parts of the world. (since you’re an international company, I felt this was a no-brainer)

    Price. The cost of the units can be a hurdle for many people in the airline industry. Without researching, I wouldn't have known that I could purchase a 2 bedroom (1 bedroom, studio combo) with a cohort, and we could share use of the 1 bedroom, and then rent out the studio permanently to make back our investment. (took some work to find this little gem.) This point is huge. Many of us in the airline industry do invest together and do vacation together, this is part of our lifestyle and the ability to share in an investment where both parties receive a PRS is important. All in all, you may find a lot of airline people cannot afford this type of investment.

    Notoriety. You seem to have a large group of members. (I assume that, based on the benefits of your first project, which is based on the scale of your group.) How many members do you have? Why don't you post the number as it’s growing? (this would encourage more growth) Also, why don't you showcase or get involvement from some of your more prominent members. (I haven't seen any pilots quotes or comments on the site) but I'm sure by now you have some quite prominent members, who could write articles for the site, or create a forum for the members to chat, etc.

    BIGGEST PROBLEM!!!
PPRuNe deserves a special deal. Why don't you think about creating a special offer for ppruners. Time limited or member limited, something to gain interest in your group and project.

Synopsis:
Whether you use this organization as a member, an investor or even as a referrer (yes, they have a referral program) it has benefits, maybe not for you today, but for the future and the future of the group. They seem to be doing good things, with good people, nothing seems fluffed and the projects are not dreams (or 'never builds') they are real. All in all, I feel this is a benefit to people in our industry. I look forward to seeing others copy their formula (which you know is inevitable) and the projects and the paths the IPG chooses in the future. If anyone has any experience with them, good or bad, please feel free to rebut!!!

[747pilot]

I have spent quite a bit of time on their sites and I would generally agree with your comments.

Although they have indicated in several areas there is good air service and I think it would be difficult to publish schedules from literally all over the world. Don't you think that would be better left up to the individual to either arrange it themselves or ask them specific questions relating to their itinerary?

I'm going to their Resort at the end of Nov and if you like I can publish a personal Report (opinion) of the entire visit, their development etc.

[Desertour]

Ridley, Thanks for the review. you seem to have a pretty good handle on our project and our group. I'll attempt to answer all your questions:

1) Affordability has not been an issue to date. the tax savings, return on investment and the ownership flexibility coupled with our Corporate Package (preferential motgage rates, terms etc.) has more than compensated for it.

2) Notoriety - Our group seeks individual privacy and consequently it is our policy not to release any membership figures. I will say that since we started 3.4 years ago our membership has grown significantly.

3) With regard to your suggestion that PPRuNE members receive discounts I will bring it up at our next Directors Meeting in the third week of November. From a personal perspective it would seem like a reasonable request but I would suspect as with most things it will depend on the interest expressed on this Forum. I will say that our members receive internal pricing on pre-construction units and "Email Alerts" advising them on Super Special Room Rates at the Resort.

4) Synopsis (Rebut) - What do you think of 747pilot's offer to post a personal assessment of the Resort after his visit?

[mach90]

Ridley you didn't answer 74's last question (#4) but I would sure like to hear his "trip report" to back up your review and verify everything from a first hand stand point.

[Skygirl1990]

DITTO, I think you should approve that Ridley

[Sensei]

I'm also going down for a personal visit shortly and if anybodys interested I will post my opinion

[CPair]

I don't know about Ridley . but I think theres probably lots of us on this forum judging by the threads who would be interested

[mobius]

in my opinion the whole point of these forums is opinions and open exchange so for my .02 cents I'd like to hear them all.

[Danny]

Well, I'm going to have a look in January. I'll be happy to report back too.

Working for a smaller airline I have less choice of subsidised travel. Getting to New York or Miami is not a problem but would appreciate suggestions on getting some kind of subsidised flight from there to Grand Cayman. A search on ba.com didn't reveal anything under a grand (GBP).

I think that if you are going to try and get UK or European citizens interested who don't have easy access to subsidised airfares you will need to look into solutions to getting to and from Grand Cayman at a reasonable price.

[Marcus Eby]

Danny we're looking forward to your visit, in fact, we've already got a couple of PPRuNers wanting to come down at the same time. Maybe it'll turn into a bash.

By the way, we're working on a PPRuNers only offer, that should make a lot of your posters happy.

Also, we're looking at Spain as one of our next destinations to build, we'll keep you updated on the progress.

Marcus

[Island Boy]

Danny

Point well taken, the UK residents we've had visit the Resort to date either work for or have reciprocal rights with BA. They operate 3 direct flights a week from LHR to GCM (Grand Cayman).

With employees of smaller carriers we can generally provide excellent round trip fares from Miami on Cayman Airways through our own agreements for our members.

Non-Stop service is also available from most of the major US carriers such as American, Delta, Continental and US Air to name a few from virtually any of the larger cities on the East Coast.

In your case we will make all the arrangements for your visit from either New York or Miami (your chose) as long as you don't wear a thong on the beach.

[Capt Marble]

Can anyone provide a link or some hard information on the residency / tax status situation in Cayman? All you guys above seem to know about it, and hunting through search engines doesn't produce much besides the usual expat in paradise stuff.

i.e.
With ref. to the IPG project, how many owners can share a property (any size?) and still benefit from tax residency?

How does Cayman define tax residency? Min. stay? Specific nationalities?

and, not totally unrelated:

What is IPG's legal status and what protection is offered for investors?

Any info. appreciated.....

[Island Boy]

Capt Marble

On behalf of IPG let me be the first to answer some of your questions. I'm assuming you've probably been to our websites and seen this Link on our IPG/related links page if not towards the bottom of the page is an excellent Cayman Islands Government portal which addresses residency etc.

With regard to joint ownership we have just started a list for those interested in that. You may find our latest Email Newsletter interesting as it discusses the concept in detail. In a nutshell the 3 bedrm unit is eligible for 3 Permanent Resident Certificates (PRS) it also has the option of being rented as 2 studios and a 1 bedroom (providing maximum financial return) or as a studio and a 2 bedroom and as a 3 bedroom. Alternatively, you can utilize one side and rent the other two.

The 2 bedrm is eligible for 2 PRS and has the option of being rented out as a studio and a 1 bedroom or as a 2 bedroom. Alternatively, you can utilize one side and rent the other.

In terms of residency there is no requirement to be in the Cayman at all nor is nationality a factor. The basic criteria is a minimum of a US $ 180,000.00 investment either in a business or property a background check and medical it's really very simple. The Government also charges a US $ 15,000.00 one time PRS payment. We are currently in negotiations with them to pay this fee over 7 years although even with it the Cayman has the cheapest PRS requirements of all the major tax-frre jurisdictions in the Caribbean. For Example the Turks is US $250,000.00 and New Providence (Nassau) in the Bahamas is US $ 500,000.00. If you're interested in downloading a Residency Application you can Login to our Castaways' Cove website and under Airline Employees/Purchase or Reserve a Villa to view it.

Finally, IPG is an international consortium of airline pilots, it is an adhoc group, we have incorporated a limited company to enter and execute any legal matters etc. Castaways Cove is a joint venture between us and the Thompson Group who among other things have been developing in the Cayman for over 30 years. They are fully capitalized and bonded. The whole purchase and any related transactions are handled by Century 21 Realty one of the largest in North America and the Caribbean. All monies are held by them in escrow IPG does not receive any funds from purchasers.

Purchasers pay according to the following Payment Schedule:
(all funds are in US Dollars)

1)$1000.00 REFUNDABLE Deposit to hold a unit for 30 days ( during this timeframe any mortgage funding (if required) is arranged (we also have an extensive Corporate Package) with preferential mortgage rates etc.) We also offer (and encourage interested party(s) to) visit Castaways for a few days with complimentary accommodation to personally tour the island and the Resort.

2) Upon signing of Contract - 5% (including the $1,000 already paid)

3) Upon casting of the ground floor slab - 10%

4) Upon completion of the roof framing and plywood sheeting thereof - 10%

5) Upon Certificate of Occupancy - 75%

The Cayman is the largest offshore banking center in the world and the fifth largest worldwide with over 600 banks. They have an excellent reputation for being extremely credible and as a British Crown Colony operate under the British rule of law.

Lastly, our partners estimate a 5-10% tax-free return on investment (based on a 30% downpayment & 65% occupancy as well as unit size) when they place their unit in the Resort Rental Pool. This is after mortgage and maintenance fees. For many of our pilots they recoup their initial investment in a couple of years of tax savings.

I hope the aforementioned helps.

[Capt Marble]

Thanks Island Boy, that is a great help, and a very comprehensive reply. Will download all this and give it my full attention (eastbound to the UK tonight).

An immediate query: for PRS, I assume that $180,000 investment minimum can be partly made up with a mortgage? i.e. the resultant investment would make up the minimum figure? Or have I got that wrong?

[Island Boy]

Capt M

You're correct the USD 180,000 can be mostly in the form of a mortgage if desired. Typically the mortgage would be 70% of the purchase price or in this case $126,000. The 5-10% ROI would be based on the $54,000 downpayment and is after debt service and maintenance fees. The maintenance fees are a little higher in our development than in a lot of condo projects as ours is also a Resort with 2 restaurants, fitness center, lobby, dive shop,maid service, internet cafe, licquor store, lite tennis court, etc. to name of a few of the amenities. This greatly enhances the rentability of the owner's unit.

In certain cases mortgages can be 80 to even 85% of the purchase price and will generally be looked at on an individual basis.

Currently we have on a limited basis for our members a change to #2 of the Payment Schedule. We are taking small deposits to hold various units at pre-construction prices until we begin construction for Block "B" in Phase II ( we are already 1/2 way through the construction of Block "A" in Phase II). This building will consist of studio, 1, 2, & 3 bedroom oceanfront fee simple units. Approximately 12 - 15 units will be available at these prices and deposits.

For Example:

1) Studio US $2000.00
2) 1 bdrm US $3000.00
3) 2 bdrm US $5000.00

This offer won't last very long and is internal pricing. When we begin construction all unit pricing will go up approximately 7-10% across the board depending on location, floor, size etc., giving those who put down their deposit early a good equity early on which can be utilized for mortgages etc.

[Capt Marble]

Island Boy:
Any online mortgage illustrations specific to your project? Have tried all links on the site, but missed this. Or can you provide contact details for any banks familiar with your organisation?

[747pilot]

Hi Capt
Ive spent a lot of time on Ipg websites as I have quite an interest in their Castaways project. They have a wealth of info on their Castaways Cove website but to see it you must login in from the main page first. If you don't have a password yet you can either send them an email or download their Join the IPG Form and email it back to them and they will send you a password very quickly.

I think you can also use a generic password that's in one of threads in this section to get in. Once you login check out all the different sections from the drop down menu in the airline section as it will pobably answer alot of your questions.

In the Purchase or Reserve a Villa page you could down load a mortgage app from one of the banks they use as well as lots of other docs. i hope you enjoy it as much as i did.

[Island Boy]

Thanks 74 for offering that advice you're absolutely correct and if CM doesn't have a password he can send me a private message and I'll be happy to set him up.

CM once you Login and click on the Airline Employee Section you will see the following four sections:

1) Investment Benefits - all about residency,the project, individual benefits etc.

2) Investment Specifics - This page is important and contains:
a)The Pricing Information on the Villas
b)The Payment Schedule for the Purchase
c)Documents on the Rental Return Analysis
d)Documents that include the Maintenance Fees

3)Architectural Plans - contains all the Architectural and Floor Plans.

4)Purchase or Reserve a Villa - contains all the aforementioned data as well as the following downloadable documentation:
a)Application for Residency (Cayman Islands)
(MS Word, 51.3k)

b)Purchase Agreement
(MS Word, 100k)

c)Cayman National Bank - Loan Application Form
(MS Word, 110k)

d)Reservation Request Form
(MS Word, 45k)

Finally we have specific agreements with several on Island Banks and I would be happy to provide contact info for you if you would like. With over 600 banks on the island financing is not a problem as in anything it boils down to who provides the best terms.

Lastly I would suggest if you have an opportunity I would read and download anything of interest from the above.

[Capt Marble]

Thanks, guys, invaluable stuff. Have downloaded and digesting, slowly.

I am not clued up on overseas tax for US and Canada, but from the UK point of view, things are not brilliant with Cayman, as there is no double taxation agreement. Great that Cayman is effectively tax free, but one would get zapped by the UK tax authorities due to lack of double tax agreement (and this would make the Cayman tax residency ineffective). Same as much of the Caribbean for us. However, plenty of other reasons to buy....

Saw somewhere that IPG were considering Europe for a future project. There are some very attractive mortgage rates over here at the moment (around 4% is not unusual) and some interesting low tax countries (Cyprus, Croatia etc.). Hope they go for something on those lines, as 7.5% (Cayman?) is not immediately attractive for us over here.

[Island Boy]

Thanks Capt Marble.

We have spent many years as a group perfecting all aspects of this & future projects to provide many benefits for aircrew from all over the world.

In Canada non-resident aircrew pay taxes on the amount of time that they fly in Canadian airspace. For example Vancouver - Hong Kong is 48 minutes outbound and 42 minutes inbound over a 13-hour flight or about 11% of the flight. Revenue Canada has analyzed every route they fly right down to the prevailing winds and they file tax returns on that basis. So on the above basis that pilot flies 3 of these pairings (flights) a month and legally reduces their taxes from about 50% to 11% as a benefit of residency in the Cayman or any other tax free jurisdiction. Not Bad!!!!!!!

The US is a different story, there are only 2 countries in the world that tax on citizenship one being the US and the other is the Philippines. US non-residents can in some instances receive the first * $70 K totally tax-free as residents of the Cayman or any tax-free jurisdictions but generally the benefits to them are:
1.When our available financing option is chosen, interest payments could be used as deductions.
2. When rental pool units are not being occupied by an owner full time, there can be depreciation deductions available.
3. Expenses of upkeep and maintenance services could be deductions.
4. After purchase, there are no real estate taxes in the Cayman Islands. A once only payment of five (5%) percent government stamp duty is payable at the time a purchase is completed.
Combine that with the potential for a significant capital gain, a world-class lifestyle, and amenities anyone would be envious of it also becomes very attractive as a vacation residence.
Non-resident American Citizens could qualify for a US$70,000 annual deduction (US$140,000 per couple) on earnings offshore, * if they utilize the optional lifetime resident status available to villa purchasers in the Cayman Islands which is only 80 minutes to Miami.

Now with regard to Non Resident UK aircrew (the normal restrictions as per the Inland Revenue “IR 20” will apply for time permitted in the UK) flying from the UK but residing offshore in the Cayman they only pay taxes on the segment of the overall trip originating in the UK. For example lets assume a flight operated from Heathrow to Schipol to Hong Kong. The first segment (Heathrow – Schipol) would be taxed at the usual rate and the second (Schipol – Hong Kong) segment would be totally tax-free. It is similar to the Canadian system but obviously it is most beneficial to do a very short first sector and as many long segments after that as possible before returning to the UK. If an Offshore Base were available all Income would be tax-free.

This information is current and comes from Price Waterhouse in London. We also have both Price Waterhouse and Moore Stephens offices in both London & Georgetown looking into the retirement issue to see if something can be structured as the aforementioned tax benefits apply to operating crew only at this stage.

We have had almost a dozen enquiries from concerned Cyprus residents looking for alternatives. As a result we will also be discussing this matter with the Leader of Government Business in the Cayman (coincidentally he's currently in discussions in London) when he returns to see if the Government would entertain entering into a Double Taxation Agreement with the UK although this is generally viewed as a long shot for many reasons
The 7.5% mortgage rate is for those that walk in off the street IPG has negotiated a LIBOR and a US PRIME RATE Mortgage both 2-3 points below the going rate and basically will be determined by the individual according to the terms etc they are looking for, so in a nutshell it would be competitive.

Finally you are correct IPG will be looking at a POSSIBLE project in Europe. Over the course of our many years of evolution we have developed a strict set of criteria for the development of an all-inclusive project. The tax benefits are certainly a very important component of this strategy but not the sole determining factor lifestyle and uplift are also very important factors. We don’t see that in Croatia and from what we’re hearing about Cyprus that may not even provide the tax benefit in the near future.

If you happen to know of any other interesting jurisdictions please let us know as we are in the very preliminary stages of our due diligence and would be pleased to receive suggestions from interested parties. We would also be very interested in an operating Resort that is looking to expand or requires an equity infusion.

**** Sorry Danny as usual I used up more than my share of the Bandwidth ****