By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed fund is planning to invest between $10m-$15m in transforming a “failed development” near Sandyport into a “short-term residential” complex in the latest phase of its expansion drive.

Michael Anderson, president of RF Bank Bank & Trust, the Bahamas Property Fund’s investment manager and administrator, told Tribune Business it is aiming to close its latest property acquisition by the end of March with ambitions to start construction activity during the 2025 second half.

Affirming that the Fund remains firmly in growth mode, as it bids to double in size to $100m in property assets, he explained that the expansion strategy is simultaneously focused on diversification so that it no longer relies so heavily on the downtown Nassau corporate office space that has traditionally been its core business.

With retail shopping malls also being eyed by the Fund, Mr Anderson told this newspaper it is hoping to complete construction of its $12m-$13m warehouse/storage facility near the Carmichael Road/Gladstone Road junction by either year-end or early 2026. A 15 percent internal rate of return (IRR) is being targeted from this investment, which is expected to start generating cash “from the beginning of next year”.

As for Beaumont House, the Bay Street property immediately to the west of Nassau’s Straw Market, the RF Bank & Trust chief said the Fund aims to convert the upper floors into 48 one and two-bed Airbnb-style vacation rental apartments with hopes it will start generating “real cash flow” by the 2026 third quarter once all renovations and remodelling are finished.

Speaking after the Fund’s unaudited results for the 2024 full-year revealed a 36.6 percent year-over-year profits reduction, falling from $1.074m in 2023 to $681194, Mr Anderson said the financials were typical of a company in growth and/or expansion mode. And he warned that the results could change as the valuations of the Fund’s existing buildings and property holdings have yet to be completed.

“There are a number of different initiatives; some underway, some we are yet to close on. The Property Fund is a very active space at the moment, taking on additional debt, taking on new projects,” he told Tribune Business.

“We’re buying a piece of property out west just over the road from Sandyport. The final contract is being finalised. It’s subject to due diligence. The intent is to redevelop it as more for the short-term rental market. It’s actually a failed development. There are a few houses on it not worth anything.

“It should close by the end of March. We’re very close. We need to tidy up a few loose ends. I think it’s between $10m-$15m we’re looking to spend there. Once we complete the acquisition we intend to move fairly fast. I expect in the second half of this year we will be actually developing that property.”

Mr Anderson did not give further details on the Fund’s Sandyport project, but added that its southern New Providence storage facility, known as Bahamas U-Store Ltd, has already gone vertical with the first building “up already” near the Carmichael Road and Gladstone Road junction. 

“I think we’re currently about $4m into it, and that includes the price of land,” he added. “We’re looking to put $12m-$13m into it. We had a raw piece of land that we had to rehabilitate and fill in the holes. We recently started building and the walls have just started to go up now. It should be completed towards the end of this year, maybe even next year.

“We’re looking for returns north of 15 percent IRR. We expect that project to produce a fairly significant demand for warehouse space, particularly in that area where a lot of development is taking place. My sense is that it will start to generate cash from the beginning of next year.”

Confirming that Bay Street’s Beaumont House will be “at least a 12-15 month project”, Mr Anderson said: “That acquisition closed a few months ago. We’re busy working on the next phase; when it will get going and the type of development. My sense is that it will not be until the third quarter of next year before we see any real cash flow there. That’s another investment property.

“It’s still the same idea. I think it’s close to 48 kind of apartments, one to two-bedroom types that are chiefly residential, Airbnb. We expect there to be a restaurant on the second floor and other facilities that you’d typically need for condo-type developments like that. We’re looking at architectural renderings now to make a final decision.

“It might be the first kind of residential apartments downtown when it’s completed. It will be interesting to see what the demand is. We expect that to be another $9m-$10m, between the $10m and $15m space, by the time it is completed.”

Besides short-term and vacation rentals, Mr Anderson confirmed to Tribune Business that the Fund “is still looking to go into retail shopping malls” if it locates the right property priced suitably with deal terms to match. He added that this, as well as the Beaumont House, warehouse and now-Sandyport deals, were part of a joint growth and diversification strategy to reduce the Fund’s reliance on corporate office space.

“My sense is that we’ll be more equally diversified across short-term rentals, warehouse developments and commercial space, and office,” the RF Bank & Trust chief said. “Most of the properties we are picking up are in the same range [of investment]. It’s about diversification. It makes it less risky to have tenants in different locations and different business lines....

“We’re looking into these different areas. We do have some identified properties. Everything takes time. We’ve been at this for a long time, getting this Fund to $100m. It’s a tough task. We don’t want to do it unless we find the right properties. We’re trying to be selective with locations and the type. Is it commercial, is it the right business type, the right type of tenant? We’re happy with the fact it’s moving forward.”

Mr Anderson revealed the Fund will likely seek to raise additional equity capital from Bahamian investors in 2025, saying: “At some stage this year we’d anticipate raising additional equity for the Fund.” This came as he explained that the negative $1.971m cash balance shown for the Fund at year-end 2024 was a timing issue related to when it drew down against its $5m RBC credit facility to finance ongoing projects.

Confirming that the Fund’s cash balances were replenished by the loan drawdown, Mr Anderson said it was also making use of its $20m preference share facility to refinance the RBC credit line. When the latter starts to get near its $5m limit, the Fund will issue preference shares to pay this down, effectively making it a revolving credit facility that is constantly being topped up.

As for the Fund’s traditional flagship property, Mr Anderson said the Bahamas Financial Centre is presently enjoying around 90 percent occupancy levels with both the Government, via the Registrar General’s Department and other agencies, plus the Central Bank renting space and making it less reliant on its historical international financial services clientele.

“We get a bit more diversification in that revenue stream,” the RF Bank & Trust chief explained. “I think the Financial Centre is well-positioned at the moment.” He added that the Fund was positioned as one of the few operators with the financing capable of acquiring high-value corporate properties on a consistent basis.