Key infrastructure projects mark 2011

The year 2011 was a banner year for Bahamas infrastructure projects. Some of the most exciting projects we witnessed were the completion of the Thomas A. Robinson National Stadium and the $12 million Solomon's Fresh Market, as well as initial redevelopment work at the Lynden Pindling International Airport (LPIA).  

The Solomon's Fresh Market is located west of the Old Fort Bay Town Centre. This new market in Nassau has 500 booths within a space of over 38,000 square feet.  It is well-ventilated and there are proper drainage systems, and sellers will have access to a special demonstration area within the market. It has been open only about a month, replacing an old space lost to a devastating fire ten years ago, but we've heard that in this short time many new lease contracts are being signed. 

New Providence Development Company president of finance and secretary Marcus Grammatico in fact told the Nassau Guardian earlier this month that they expected the new Nassau market to attract "young professionals and professional-type offices" in 2012.  

The article also noted that these new tenants would add to an already dynamic mix of retail stores such as cafes, furniture and accessories stores, a clothing store, and a pharmacy, among others. We can't wait to see how these expansions in the less developed areas of the West will create new commercial opportunities for nearby Old Fort Bay and Albany.

The National Stadium project, which cost $30 million to complete after two years of construction with a Chinese business partner, is another important leisure facility with outstanding potential. It is a multipurpose venue spanning over 450 acres and accommodating over 15,000 people, and part of a larger master plan for the Queen Elizabeth Sports Centre. 

Over at the airport, a U.S. departure terminal has been opened in the first phase of a master redevelopment project worth $409.5 million in total. Phase two of the project, which they say is scheduled for completion by the end of 2012, will include other improvements in  LPIA's arrival and departure facilities. Given the increased emphasis, among other things, on tourist development strategies within the Bahamas, this should help increase our medium and long-term appeal as an investment destination. 

The New Providence Road Improvement Project (NPRIP) has not done as well as the projects we mentioned, mired as it was by controversy and delay. The road project required an additional infusion of $40 million dollars and will now cost the government a total of $154 million to complete. The government now plans to procure about $50 million in funds through the IDB to achieve this. Hopefully the road will be completed without further long-term disruption to businesses in Prince Charles Drive and Market Street.

That said, in 2012 we expect more good things with the rise of Arawak Cay port, a project which will take the better part of twenty years to complete. Funds for Arawak Port Development (APD) project will come from a $10 million IPO being held over the Christmas period until January 31, 2012.

 

We hope the IPO is well-subscribed. The port should boost Bahamas' GDP by $800 million, according to a recently released KPMG Corporate Finance economic impact statement mentioned by The Tribune. More importantly for us, it will free up a crucial 20 acres of attractive waterfront land in downtown Bay Street.

New owner for Atlantis Resort

The famed Atlantis Resort got a new owner two weeks ago. Kerzner International was struggling with debt since the economic downturn in 2008 and transferred ownership of the mega property to Brookfield Asset Management, a Canadian company.

Real estate transactions of this scale are complex. Brookfield was already a lender to the property and agreed to forgive many millions of dollars of debt in exchange for title. Kerzner, however, will remain as the management and operations team,insisting that the Atlantis property has always been profitable (it was other properties in the Kerzner portfolio that carried the debt). Kerzner, which also owns the Dubai Atlantis resort, worked for more than a year to resolve its debt issues. With Brookfield already invested in Atlantis Bahamas and Kerzner’s Palmilla Resort in Mexico, the debt for title exchange was a workable solution for both parties.

Resorts of this scale have a profound effect on the local economy. Atlantis Resort employs some 7000 people. A change in ownership could dramatically affect the future of the employees, so Prime Minister Ingraham became involved and made a statement. Although Brookefield has not specifically stated that jobs are guaranteed, all sides have stated they are committed to maintaining the work force and the high levels of service the resort is known for.

Brookefield is a global firm, with decades of expertise in real estate investment and holding billions in assets and a healthy cash flow. This is good news for us. It is not only jobs at stake, but the entire supply chain of Bahamian companies that profit from doing business with Atlantis. As the largest private employer in the country, there is a lot at stake. PM Ingraham noted in his statement last week that 15% of Bahamas jobs are related to Kerzner International.

Brookefield, to its credit, has stated that it has no plans to turn around and sell the property in the foreseeable future.

The CHICOS Conference

The Atlantis Resort in Nassau was the site of the HVS Caribbean Hotel Investment Conference & Operations Summit (CHICOS) on November 10-11. Our broker, Peter, attended and was impressed with the number and types of investors, developers, partners and lenders who attended this inaugural event.

HVS is an international tourism and hospitality consulting and services firm. Following on their template for a South American hospitality conference, HVS saw the need for a Caribbean conference focusing on issues specific to the region.

The conference included great round table discussions from every point of view about trends in the Caribbean hotel industry. Sessions covered where to invest, how to invest and how to secure financing. HVS’s unique contribution is the Task Force concept, which distinguished this conference from others in the region. The Task Forces formed at the summit will work through the year on specific issues within the region to improve the success of the various hospitality industries by addressing the obstacles that prevent or limit growth.

This concept is particularly important for us at Dupuch Real Estate. We secured the buyer in the sale of the former Sheraton Grand Hotel to RIU Hotels. As brokers dealing with clients seeking large property transactions, we found the sessions filled with information and knowledge valuable to our clients who are looking to purchase resorts.

The conference covered a wide range of critical topics including investing, lending, airline schedules, financing, incentives, public-private partnerships, elements of a successful resort, education and training of personnel and market diversity. The speakers represented the best in the field and included the COO of American Airlines, the Prime Minister of Aruba, the Director and Chief Economist of FirstCaribbean International Bank, and the Global Vice President of Expedia among many others.

Bahamas Real Estate | ERA Dupuch

Bahamas Real Estate | ERA Dupuch