Friday, March 17, 2023
By NEIL HARTNELL
Tribune Business Editor
Three “credible offers” to acquire the Grand Lucayan resort are presently being studied, the deputy prime minister said yesterday, as he and others touted $1bn worth of investments being “in the pipeline” for Grand Bahama.
Chester Cooper, also minister of tourism, investments and aviation, told the Grand Bahama Business Outlook conference that the Government was most concerned that any chosen buyer possesses the financing to develop the island’s so-called ‘anchor property to a “world class standard”.
Having heavily touted the previous Electra America Hospitality Group deal, only to subsequently see it collapse and have to begin the buyer search anew, he indicated the experience had been a lesson learned, adding: “I ain’t saying nothing else until money is in the bank.”
While not naming any of the three potential purchasers, Mr Cooper told attendees: “It is critically important to this government and Grand Bahama that we find a buyer for the Grand Lucayan resort. Far too much money has been spent, and far too many opportunities await us not to have this on our agenda.
“I’m advised by the chairman of Lucayan Renewal Holdings [Julian Russell] that there continues to be considerable dialogue and interest in this resort. We recently received three credible offers for this resort.... and they are already undergoing due diligence. We are committed to achieving the best possible result for the Bahamian people.”
Mr Cooper added that it was vital that the Grand Lucayan’s buyer possess the financing to not just close the sale but also redevelop the property into a destination capable of attracting sufficient airlift and visitors to Grand Bahama - a project that Electra itself estimated might require at least a $300m-$400m investment.
“The key is to ascertain development financing or financing for actual development,” the deputy prime minister explained. “If we just wanted to sell the hotel, it would be done. The closing finance is important, but the buyer’s capacity to resort the resort to world-class standards is paramount.”
Mr Cooper praised the Grand Lucayan’s management for keeping its sole open property, Lighthouse Point, “in relatively good order and good form notwithstanding the challenges”. He added that more than 100 Bahamians were employed at the resort, which was running an occupancy rate of around 90 percent - albeit that its other two resorts, the former Memories and Breaker’s Cay, are closed.
Noting the property’s significance for Grand Bahama, the deputy prime minister added: “While I remain cautiously optimistic, I will only make any further public pronouncements when full due diligence is complete, funding has been identified and placed in an escrow account and we have definitively identified a closing date. I ain’t saying nothing else until money is in the bank.”
Tribune Business previously revealed that the failed $100m sale to Electra America Hospitality Group is set to cost Bahamian taxpayers a further $9.1m with subsidies to the resort for the full fiscal year near-doubling in the 2022-2023 mid-year Budget.
The Davis administration is increasing funding for the hotel from the originally-forecast $10.3m to $19.4m, an 88.3 percent rise, which has almost certainly resulted from the Government having to hold the property for longer than anticipated after that deal collapsed in November 2022.
The extra $9.1m may seem relatively minor when measured against the Government’s projected $3bn in recurrent spending for the 2022-2023 fiscal year, but the taxpayer’s total Grand Lucayan exposure - including the initial $65m purchase price paid to Hutchison Whampoa’s real estate arm in September 2018 - is now likely to be moving close to the $200m mark. Many Bahamians will likely only believe the resort has been sold when they actually see it happening.
Meanwhile, both Mr Cooper and Ian Rolle, the Grand Bahama Port Authority’s (GBPA) president, touted “about $1bn of new investment projects coming out of the pipeline for Grand Bahama” during their respective presentations. The deputy prime minister referred to a new 95-acre eco tourism project, being spearheaded by a US investor group, that is targeted for an area near Holmes Rock in west Grand Bahama. The land purchase for the development is set to close shortly.
More than half of the $1bn that the two men identified is likely to come from just two projects - the $200m Carnival Cruise Port and the $350m-$400m investment by the Grand Bahama Shipyard in two new dry docks, which are likely to become operational by the end of 2025 moving into 2026. Other major projects include the $200m Grand Bahama International Airport redevelopment, plus Weller Development’s $200m-$250m Six Senses resort.
Mr Rolle’s presentation yesterday gave a glimpse of Barbary Town, which is thought to be an additional project that Weller plans to undertake on a 2,000-acre land option it has acquired in the Barbary Beach area. Thought to be close to obtaining government approval, several sources have suggested it will be equivalent to Freeport’s version of Lyford Cay without the gated community, while also featuring at least two resorts alongside the high-end real estate.
Neither Mr Rolle nor Marc Weller, Weller’s founding partner and president, mentioned this in their respective presentations yesterday. However, the former said: “What we see is major real estate development happening over the next few years as well.
“Over $1bn of investment is in the pipeline. Some of those projects have already started, some have had their business licence applications approved, and some are going through getting their business licences approved.”
The GBPA president confirmed that Royal Caribbean’s $70m cruise port expansion, and redevelopment of Freeport Harbour in partnership with ITM Group and another party who he did not identify remains on the table. He added that both Carnival and Royal Caribbean’s investments are projected to each bring one million cruise visitors per annum to Grand Bahama once fully operational.
Urging Bahamian entrepreneurs to develop new and expanded tours, excursions and attractions in preparation for this potential visitor influx, Mr Rolle said the second phase of the Western Atlantic Medical School expansion is expected to begin shortly as plans have already been submitted. “The idea is to focus on these types of investment because we believe Freeport has the right environment for them,” he added.
Mr Rolle also hailed the former Minnis administration’s Commercial Enterprises Act for helping to entice the EY accounting firm to establish an international office in Freeport, as its expatriate staff were able to obtain “quickly” BH1B work visas under that law’s provisions. The company is now seeking to expand its Freeport operation and will start construction on a building in Freeport’s Mall area within the next few months.
Commenting has been disabled for this item.