Seeking Caribbean Alpha in 2026
By Adam Greenfader and Nathan Whigham
What Was the Lock, and What Is Now Opening
The Caribbean has never been an easy market for traditional capital. Even in stable cycles, the region demands patience, local knowledge, and flexible structuring. Regulation is extensive, traditional lenders maintain conservative risk tolerance, and the region’s geographic diversity limits the ability of large institutions to scale efficiently.
Why The Caribbean Works for Investors
For investors, the Caribbean opportunity increasingly lies in high yield with controlled risk. When risk is assessed based on observed default behavior rather than perception, well structured Caribbean real estate often performs more defensively than traditional markets. Assets rarely fail in isolation. In close knit island markets, long term relationships and reputation strongly influence sponsor behavior. Lending terms in the Caribbean often reflect this dynamic. Transparency and direct communication between sponsors and lenders are not optional. They are part of the market culture.
Caribbean loans also tend to be structured with tighter oversight, clearer cash control mechanisms, and more frequent lender reporting. These features provide lenders with earlier visibility into asset performance and allow issues to be addressed before they escalate.
Risk is further mitigated by high barriers to entry. Limited land availability, restrictive zoning, environmental protections, coastal constraints, and rising replacement costs make it difficult for competing projects to quickly come online. In many islands, new supply is structurally constrained, supporting long term pricing power and asset values.
This combination of tangible collateral, multiple exit paths, and constrained competition creates return profiles that are both yield enhanced and structurally resilient. As a result, private credit, preferred equity, and structured equity strategies tied to these markets are attracting increased attention from private wealth and institutional investors.
From Capital Contraction to Transition
The period from 2023 through 2025 marked one of the most restrictive credit environments in recent memory. Bank failures in 2023, combined with the full implementation of Basel III capital requirements, forced traditional lenders to hold higher reserves and reduce exposure to non core markets. By 2026, the environment has shifted. Inflation has moderated, interest rates are trending downward, and capital markets are gradually reopening. This easing improves feasibility, but it does not signal a return to pre 2020 lending behavior. Instead, it marks a transition toward more disciplined, structured, and sponsor focused capital deployment.
The Cost of Capital in a Lower Rate Environment
As rates decline, the cost of capital is easing, but it remains structurally higher than historical lows. Construction costs, insurance premiums, and climate risk pricing continue to influence underwriting decisions. In 2024, a typical Caribbean hotel construction loan carried interest rates near 11.5 percent, with loan to cost ratios around 55 percent from traditional lenders, and higher pricing from private credit and family office capital. By 2026, borrowing costs are improving, but lenders remain selective, prioritizing projects with strong sponsorship, realistic phasing, and multiple layers of capital protection.
Insurance remains a critical variable. Rising premiums and climate related underwriting constraints continue to shape deal structures, with increasing emphasis on resiliency, mitigation strategies, and long term operational sustainability.
Who Is Providing Caribbean Capital in 2026
While many traditional institutions paused during the tightening cycle, private capital continued to adapt. In 2026, the Caribbean capital stack is increasingly supported by:
Private credit and private debt funds
Family offices and high net worth capital
Structured equity and preferred equity investors
Fintech enabled and non bank lenders
These groups are not replacing banks entirely. They are filling gaps where traditional lending remains constrained.
A More Complex Capital Stack Is the New Normal
A five star Caribbean resort now routinely requires five to seven capital sources. For example, a US$250 million capital stack may include senior debt, development finance institution tranches, private credit, family office equity, tokenized equity, and sponsor capital.
Complexity is no longer a liability. It is a competitive advantage.
What Lenders Are Requiring Today
Stronger sponsors and guarantees. Experience matters. Lenders prioritize sponsors with demonstrated Caribbean track records and asset class expertise. Personal and corporate guarantees, completion guarantees, and bonding remain common, reinforcing alignment between sponsors and lenders.
Land valuation discipline. Land lift has largely disappeared. Lenders typically underwrite land at original cost, not projected appreciation, requiring sponsors to carry true equity risk.
Presales and capital reduction strategies. In hospitality and mixed use projects, condo hotel presales remain attractive. Presale thresholds typically range from 35 to 65 percent, reducing total capital requirements while demonstrating market acceptance.
Loan syndication and risk bifurcation. To manage exposure, lenders increasingly syndicate loans or bifurcate risk. Large hospitality financings are often structured with separate debt instruments for hotel and residential or condo hotel components, allowing differentiated risk profiles within the same project.
Where Capital Is Still Flowing
Despite tighter underwriting, capital continues to support mission driven developments. These projects benefit from:
Unique cultural or historical positioning
Scarce coastal or gateway locations
Strong lifestyle and tourism demand
Alignment with sustainability and resiliency themes
These attributes help projects stand out in a more selective capital environment.
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Three Alternative Capital Trends Defining Caribbean Real Estate in 2026
The next phase of Caribbean capital is being shaped by three structural trends now consistent across the region.
1. Funds Are Replacing Fragmented Buyers
Developers are increasingly partnering with debt and equity funds to purchase residential, hospitality, and branded units in bulk, both during pre-construction and post completion. Bulk takeouts are no longer viewed as distressed solutions. They are strategic tools.
For developers, bulk transactions accelerate liquidity, reduce sellout risk, and improve balance sheet visibility. For lenders, they enhance absorption certainty and cash flow clarity. For funds, they offer scale, pricing efficiency, and exposure to real assets with defined operating strategies.
2. Private Equity Is Reshaping Island Markets
Private equity and alternative capital are no longer supplemental. In 2026, they are foundational.
By aligning capital horizons with development timelines and asset life cycles, investors are reshaping not only individual assets, but entire island destinations. Rather than pursuing short term yield, this capital is underwriting multi year transformations. Puerto Rico illustrates this shift clearly. Through Act 60, private equity has enabled full recapitalization and long term repositioning of legacy resort assets, requiring patient capital, flexible structures, and long term alignment.
3. Cross Border Capital Is Redefining Caribbean Real Estate
International capital is increasingly active across the Caribbean. European investors, particularly from the Netherlands, are deploying capital into markets such as Sint Maarten, Aruba, and Curaçao. One prime example is the Setai in Sint Maarten that secured construction capital from a large Dutch pension fund.
These investments reflect confidence in jurisdictions with established legal frameworks, stable tourism demand, and economies linked to the euro and U.S. dollar. For sponsors, cross border capital brings scale and longer horizons, while raising expectations around governance, transparency, and execution.
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The Landowner as a Capital Partner
A critical but often overlooked dynamic is the landowner’s role in helping to finance hotel development. Rising costs and thinner margins have elevated landowners into active capital partners through land leases, phased transactions, equity contributions, subordinated positions, and performance based participation.
In today’s environment, land is not just an asset. It is a financing tool.
Resilience, Sustainability, and the Next Wave of Capital
Resiliency is no longer a cost center. It is a source of capital. DFIs, multilaterals, impact funds, and tokenized investors increasingly reward credible sustainability frameworks with better pricing, longer tenors, and greater flexibility.
Final Reflection: A New Era Demands a New Lens
Caribbean development can no longer rely on one or two financing channels. The future belongs to those who can design smarter capital stacks, integrate diaspora capital, embrace tokenization, collaborate with landowners, and structure resiliency as a performance driver.
In the Caribbean, success in 2026 will favor teams that understand both local execution and global capital expectations. Navigating layered capital stacks, cross border investors, landowner partnerships, and increasingly complex underwriting requires experience that spans development, finance, and transaction execution.
This is where the combined experience of AG&T and EN Capital matters. Together, we bring decades of on the ground Caribbean development experience, deep relationships across private wealth and institutional capital, and a proven ability to structure and close complex transactions across hospitality, mixed use, and destination driven assets.
AG&T’s long standing presence across the Caribbean provides insight into local markets, regulatory environments, and development realities. EN Capital’s capital markets expertise brings disciplined structuring, access to diverse capital sources, and the ability to align projects with the right investors at the right point in the cycle.
In a market shaped by alternative capital, private equity, and global investors, execution matters more than ever. The next phase of Caribbean investment will not be led by those waiting for simpler conditions, but by teams prepared to structure smarter, partner broadly, and deliver Alpha across cycles.
Adam Greenfader
Chairman
AG&T
Nathan Whigham
Founder and President
EN Capital
About En Capital
EN Capital is a capital advisory firm focused on commercial real estate, renewable energy and space companies The firm is active across the United States, Puerto Rico, other Caribbean Markets and LATAM. ENC provides advisory on project capitalization, corporate credit & M&A. Nathan Whigham is the Founder and President of EN Capital. He has been in the capital markets and finance industries since 2006 and has been involved in over $1B of transactions up and down the capital stack across a variety of transaction types in corporate credit, commercial real estate, renewable energy and other market segments.
About AG&T
Since 1993, AG&T is a premier Caribbean real estate development and advisory firm headquartered in Miami, Florida. AG&T has played an integral role in over 55 high-profile development projects valued over $1.5 billion, including master-planned communities, luxury hotels, affordable housing, and private island resorts. Key markets include Puerto Rico, Sint Maarten, Jamaica, USVI, Costa Rica, and Mexico. AG&T proudly serves a clientele that includes developers, hedge funds, private equity firms, and various institutional capital groups. Adam Greenfader is the Chairman of AG&T. He has notably chaired the Caribbean Council at the Urban Land Institute (ULI) and currently serves as the Florida Liaison for the Puerto Rico Builders Association. His recent work, the 2025 edition of “Why Puerto Rico Now: A Masterplan for Resurgence, Resiliency, and Long-Term Economic Growth,” encapsulates his vision for a vibrant, forward-thinking future for Puerto Rico.
