According to a report in today’s El Financiero, the CEO (Director General) of Starbucks Coffee de Mexico, Gerardo Rojas, said that Starbucks Coffee Company (NYSE: SBUX) will increase its ownership stake in Starbucks Coffee de Mexico in 2009.  

Starbucks Coffee de Mexico is a joint venture that was formed in 2002 between Starbucks Coffee International, Inc., a Washington corporation, and SC de Mexico, S.A. de C.V., an affiliate of Alsea, S.A.B. (MX: ALSEA), one of Latin America’s leading franchise operators and foodservice distribution companies.

Mr. Rojas said that the joint venture agreement gives Starbucks Coffee International the right to increase its participation in Starbucks Coffee de Mexico, which has performed well in the Mexican market.

In 1998, 120 coffee producers in the El Triunfo Biosphere Reserve in Chiapas became major Starbucks coffee suppliers.  Starbucks serves and sells their coffee throughout the world under the Shade Grown brand name.

The bidding for a concession to construct and operate a new airport to be located near the coastal hamlet of Tulum, Quintana Roo, is expected to open before October 31, 2008, according to a Ministry of Communications and Transportation (Secretaria de Comunicaciones y Transportes) official who was quoted in a report in today’s El Financiero. 

The report said that the airport will be capable of handling 3 million passengers annually and the concession will be awarded to the company that offers lowest construction and operational costs.  The government is expected to announce the winner of the concession in 2009.  Construction should be completed by 2012.

Companies expected to submit bids include Mexico’s three major airport operators (which were created in 2005 upon the privatization of the airport management entity): Aeropuertos del Sureste de Mexico, S.A.B. de C.V. (ASUR), Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (PAC), and Grupo Aeroportuario Centro Norte, S.A. de C.V. (OMAB).

Tulum, located in the southern portion of the Mayan Riviera, is home to significant Mayan ruins.

The Diario Oficial de la Federacion (Official Federal Daily) today issued the official call for bids for the Punta Colonet port development project, a copy of which is available here.

The concessions to be granted simultaneously pursuant to the call for bids are:

A concession for the construction, operation and expoitation of a general rail communication line that includes routes originating at Colonet Bay, Ensenada, Baja California with one or two destination points at the U.S.-Mexico border and the provision of public rail cargo service and the permits to provide services relating to such routes;

A concession for management of the port and for the exploitation, use and enjoyment of public property of the federal government that forms part of the port area located in Colonet Bay, Ensenda, Baja California; and

A concession for the exploitation, use and enjoyment of public property of the federal government in the port area located in Colonet Bay, Ensenda, Baja California, and the construction, operation and exploitation of a public use commercial container terminal and the provision of related port services.  

Important dates for prospective bidders are September 8, 2008, which is the deadline for requesting admission to the bid orientation meeting, and October 2, 2008, which is the deadline to request paperwork for registration of interested bidders. 

Additional information on the Punta Colonet port development is available in Mexico Law Blog posts dated August 28, 2008 and July 31, 2008.

The slots of Mexican low-cost start-up airline Interjet at Benito Juarez International Airport in Mexico City will be sold at public auction in 90 days, according to a report in today’s El Financiero. 

The report said that the Mexian Airspace Navigation Service (SENEAM) was revoking the slots because Interjet failed to pay slot usage fees of approximately US$193,000, which were originally owed by Aerocalifornia and assumed by Interjet, from which Interjet acquired the slots.  Interjet may participate in the auction.  In the meantime, the report said that Interjet will need to find other slots at Benito Juarez Airport during less saturated airport hours, which are generally late at night and early in the morning. 

Interjet, which is controlled by Grupo Aleman, principally operates out of the Toluca airport near Mexico City.

Best Buy will invest US$400 million in Mexico over the next three years to open its first 20 stores in the country, according to a report in today’s El Financiero. 

Eduardo Garcia Fabregat, the CEO of Best Buy’s Mexico subsidiary, who was quoted in the report, said that Best Buy is targeting the Federal District-Guadalajara corredor and that the company plans to establish stores in Mexico City and its periphery, as well as in the states of Michoacan and Jalisco.

As Mexico Law Blog reported on August 24, 2008, the first Best Buy store in Mexico will be located in the Mundo E shopping center north of Mexico City.  The Mundo E location will be the company’s second largest store, at 5,500 sq. meters and with 2.5 million potential customers.  The company’s largest store is located in Shanghai.

Chrysler Mexico announced that it would lay-off 300 workers from its Derramadero, Coahuila plant because of decreasing demand for pick-up trucks in the United States, according to a report in today’s El Financiero. 

The report said that Chrysler Mexico would continue its plan to invest US$570 million in its Saltillo facilities, where production is expected to commence in 2009, generating 485 new jobs.

Clients often ask about the restrictions on foreign ownership of Mexican coastal and border real estate. 

Here are the basics:

1.   Article 27 of the Mexican Constitution prohibits foreign (i.e., non-Mexican) ownership of: (A) Land within 100 kilometers (62 miles) of the territorial borders of Mexico; and (B) Land within 50 kilometers (31 miles) of the coast of Mexico (collectively, this land is called the “Restricted Zone“)

2.   The 1998 Foreign Investment Law creates certain exceptions to the constitutional prohibitions on foreign ownership of Mexican real estate located in the Restricted Zone.  The availibility of the exceptions depend on whether the real estate will be used for residential or non-residential purposes, as defined under the Foreign Investment Law.

• Residential Purposes.  If the real estate will be used for a second home, rental income property, or a primary residence, then the foreign buyer must buy the real estate through a Mexican trust (fideicomiso), with a qualified Mexican bank serving as trustee (fiduciario).  The seller (and settlor of the trust, or fidecomitente) will convey the title to the trust at the closing.  The buyer will be the beneficiary (fideicomisario) of the trust and may generally use, transfer, gift, or sell the real estate contained in the trust to third parties, either directly or by instructing the trustee to do so.  The trust has an initial term of 50 years, which may be extended for additional 50-year periods by written application to the Ministry of Foreign Relations (Secretaria de Relaciones Exteriores), which, as long as the purposes of the trust are the same as when the trust was formed, should be approved.  The buyer may name secondary beneficiaries of the trust to make it easier to pass the real estate to children or other heirs.  Such beneficiaries may be individuals, corporations, partnerships, or other entities.  However, when the real estate held in the Mexican trust is a condominium or other property that is subject to bylaws or regulations, an entity is the beneficiary of the trust, and ownership of the entity is shared among investors, the entity should make certain that the shared ownership structure does not violate such bylaws or regulations prior to purchasing the property.  
• Non-Residential Purposes.  If the real estate will be used for non-residential (i.e., commercial) purposes, then the foreign buyer may purchase the land through a foreign-owned Mexican corporation, limited liability company, or other entity.  Article 5 of the 1998 Regulations to the Foreign Investment Law list some of the activities that are deemed non-residential use of real estate, as follows:

subject to a time share;

intended for some industrial, commercial, or tourism activity, and which may be used simultaneously for residential purposes;

acquired by credit institutions, financial brokers, and credit auxiliary organizations, repossessed to recoup debts in their favor;

used by legal entitites to fulfill social objectives that may consist in the transfer, urbanization, construction, and all other activities inherent to the development of real estate projects until they are commercialized or sold to third parties; or

used for commercial, industrial, agricultural, livestock, fishing, forestry, or the rendering of services.

The foregoing is merely a summary of the restrictions on foreign ownership of Mexican coastal and border real estate.  Foreign investors in Mexican real estate should consult a competent Mexican attorney before entering into any real estate transaction in Mexico.

The Export-Import Bank of the United States announced on August 27, 2008 that it had approved a US$80 million medium-term credit guarantee facility to provide financing for up to 85% of purchases of equipment and services by Mexico’s national electricity provider, the Federal Electricity Commission (Comision Federal de Electricidad  - CFE), from to be selected U.S. suppliers. 

The guarantee provides a great opportunity to U.S. exporters of electric plant equipment and services, which may wish to take a sales trip to Mexico to visit CFE officials and market their wares and services as soon as possible.

More information about the Ex-Im guaranty to the CFE and how it benefits U.S. exporters is available here.

Mexican President Felipe Calderón officially announced the bidding for the Punta Colonet multimodal project today, according to a Ministry of Communications and Transportation (Secretaria de Comunicaciones y Transportes) press release.  The project will be located about 86 miles south of Ensenada, Baja California.

The project includes the construction of new port facilities, container terminals, a desalination plant, highway improvements, and 186 miles of rail lines, which will link Punta Colonet to the United States.  According to a report in today’s El Financiero, possible rail routes may run through Mexicali, Yuma, Nogales, or El Paso, but the bid terms will allow the concession winner to determine the route.  Once completed, the port is expected to double Mexico’s capacity for the handling of shipping containers to six milliion containers per year. 

The report said that the Punta Colonet port will be situated on approximately 6,700 acres, 205 of which are public lands owned by the government and 6,425 of which are territorial sea beds.  The precise boundaries of the project are set forth in the Official Federal Daily (Diario Oficial de la Federación) dated December 18, 2006.

Construction and operation of the project is expected to generate 83,000 jobs, 24,000 during construction and 59,000 during operation, and US$500 million in annual revenue.  Work is anticipated to commence in 2009 end by 2013 or 2014. 

Bid terms will be published next week, with Mexican development bank Banobras serving as bidding agent.

The report said the government also plans to allow construction of a new airport in Mesa de Tigre, Ensenada, with cargo capabilities to serve Punta Colonet. The airport will require private investment of approximately US$224 million.

The call for bids for the Punta Colonet project has been delayed several times due to the project’s complexity and land disputes with mining company Grupo Minero Lobos (GML), which had a concession to develop approximately 74,000 acres of coastline for mining projects, according to a report in Business News Americas (BNA).  Although the government revoked GML’s concession on July 18, 2007, the revocation has not been published in the Official Federal Daily, as required by Mexican law to consummate official invalidation of a concession, according to the BNA report.  The BNA report said GML still claims rights to the land.

As Mexico Law Blog reported on July 31, 2008, companies expected to submit bids for the Punto Colonet concessions include A.P. Moller-Maersk Group, Dubai Ports World, Ferromex, Hutchison Port Holdings, MTC Holdings, Pacer Stacktrain México, and Union Pacific México.  The bidding companies will likely form consortiums, given the project’s magnitude.

Best Buy will commence its operations in Mexico upon the opening of its first retail store in the country in October 2008, according to a report in El Financiero today.  The store will be located in the Mundo E shopping center in northeast Mexico City. 

The report said that Best Buy also plans to open a store in the Jalisco state after inaugurating the Mexico City location.  Best Buy hopes its Mexican stores will capture a portion of Mexico’s US$14 billion consumer electronics market.