Building Real Estate In Remote Locations
Welcome to The Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. My wife and I just returned from a seven-day cruise from Stewart, Alaska, to Vancouver in Canada. It was a magnificent trip. If you haven’t taken that trip, I highly recommend the inside passage from Alaska down to Vancouver, or perhaps in the other direction.
One of the stops was a port of call, created specifically for the cruising industry, known as Icy Straight Point. This port is built into the side of an island off the coast of Alaska. Most people on the ship would have enjoyed the fresh-cooked salmon and marvelled at the numerous souvenir shops sprinkled throughout this manufactured village. I, on the other hand, looked at it through the lens of real estate investment.
Cruise lines are often looking for ports that charge low landing fees. These fees amount to huge sums of money over time. That’s why each major cruise line mountain has built their own beach club at a private island in the Bahamas. They get a day at the beach with no port fees and no landing fees.
The investment structure in Icy Straight Point is a unique partnership between the Juna Totem Corporation and Alaska Native Village Corporation. It maintains full ownership and operational control, whilst the major cruise lines act as key investors. This model allows the Native Corporation to retain sovereignty while securing the capital needed for port development. It was a significant investment, primarily from Norwegian Cruise Line and Royal Caribbean. It was structured as a long-term partnership to fund the development of a second cruise pier and various new attractions. The expansion created a new port area known as Wilderness Landing. This investment was crucial for accommodating larger cruise ships and increasing the port’s capacity while allowing the Juna Totem Corporation to maintain ownership.
This significant expansion focused on separating the historic area of the port from a new adventure and wilderness. Many amenities were developed through the investment. They included a second cruise pier. The most significant part of the investment was the construction of this pier at Wilderness Landing, built to accommodate Norwegian Cruise Line’s largest ships. The new pier, which opened in 2021, allowed the port to handle more ships and passengers simultaneously and alleviate congestion at the original Cantery Pier. They created two cable car systems with gondolas to connect the two areas of the port and create a vehicle-free zone.
The first one is called a transporter gondola and basically takes you from one side of the island to the other. The second one is the sky glider gondola, and it takes you from Wilderness Landing up the mountain providing access to new trails, a mountaintop viewing platform, and a launch point for a brand-new zipline. There was a considerable amount of retail and dining developments. The Wilderness Landing area was developed with locally owned shops, several dining options, and additional amenities to handle the increased number of visitors. They also expanded the number of excursion offerings. These include hiking trails, a suspension bridge, a tour center for bear and wildlife viewing, and streamlined access to an impressive zip line that looks quite intimidating.
The investment structure for Icy Straight Point is a unique partnership where the Juna Totem Corporation retains full ownership control. The Juna Totem Corporation represents more than 1,550 Alaska native shareholders. All profits from the port are re-invested back into the community of Juna, setting it apart from other cruise ports which might be owned by the cruise lines themselves or by municipal governments. In exchange for the investment, the cruise lines receive preferential berthing rights for their ships, ensuring a secure and efficient way to bring passengers to the destination. It guarantees the cruise line a long-term presence at the port.
The post broker structure allows the Juna Totem Corporation to control development in a way that is in line with their cultural and economic goals, and gives the cruise lines a stake in a high-demand destination, without having to assume direct ownership. This native village’s income is not derived solely from on land concessions, it has several revenue streams, with a substantial portion coming from the tourism business at ICE Strait Point, including both landing fees from cruise ships and revenues from on land activities. The Juna people do receive a port fee or landing fee directly from the cruise lines. That’s a fundamental part of the business model, and the investment from the cruise lines in the second pier was made in exchange for preferential access. The repayment of the investment is made through those fees. Other revenue comes from on land concessions. This includes shore excursions such as whale watching trips and hiking trips in areas where there are definitely bears. There’s also the zip line and, of course, the gondola. And then, of course, retail and dining. And finally, ground transportation, which includes things like the gondolas, which take you from the port all the way up to the summit.
I personally found Icy Strait Point to be a very interesting business prospect. It solves a problem for the native people and at the same time, solves a problem for the cruise lines. Next time you’re on a trip, take a look behind the curtain. As you think about that, have an awesome rest of your day. Go make some great things happen. We’ll talk to you again tomorrow.
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