The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An Argentine developer and his Ukrainian-born billionaire partner are the duo seeking to acquire the One & Only Ocean Club from Brookfield Asset Management, Tribune Business can reveal, although no deal has been sealed yet.

Alan Faena, the Faena Group’s founder and president, and his New York-based partner, Len Blavatnik, were yesterday identified by multiple sources as the upscale Paradise Island property’s suitors, amid suggestions that any deal may have hit “a snag” in recent days.

“It was running pretty well at the time,” one source told Tribune Business of talks between Brookfield and the Faena/Blavatnik group. “There’s been a snag, and whether they’ve been able to work it out, I don’t know.”

Tribune Business exclusively revealed last month how top Brookfield executives were tight-lipped over the One & Only Ocean Club’s future, after this newspaper was tipped that the property was up for sale and a serious buyer was circling.

That buyer is the Faena/Blavatnik combination, with sources suggesting that a purchase price ranging from $85 million to $130 million was being discussed for the One & Only Ocean Club.

Messrs Faena and Blavatnik have worked on several major resort/real estate developments together over the past decade, including the ‘Faena District’ neighbourhood in Buenos Aires, the Argentine capital.

The duo are also partners for the Faena District Miami Beach, a multi-million development for which construction started last year in south Florida.

Mr Faena’s fortune stems from the Via Vai fashion label, which he founded in 1985 and sold in 1996. Mr Blavatnik’s wealth comes from his international industrial conglomerate, Access Industries, which also purchased Warner Music Group in a multi-billion deal.

Mr Blavatnik is ranked by Forbes as the world’s 39th richest person, with an estimated fortune of$18.7 billion In the Sunday Times Rich List 2013, he was listed as the second richest person in the UK.

Thus if the One & Only Ocean Club purchase closes, the Bahamas may gain two investors of considerable means. Tribune Business understands that Bahamian attorneys have received the necessary instructions to perform legal work in preparation for the closing of any deal.

It is unclear, though, whether Kerzner International’s One & Only brand would be retained as the operating/management partner for the Ocean Club. The former owner secured a 15-year management agreement with Brookfield as part of the early 2012 debt-for-equity swap restructuring.

Brookfield, though, is not under any pressure to sell the One & Only Ocean Club. Given its deep capital pockets, it will only entertain buyers who offer a rich valuation.

“Brookfield is a huge fund,” one source said yesterday. “They do have the wherewithal to carry the Ocean Club, and have other resort and hotel facilities around the world, so they know how to operate it.”

Multiple well-placed Tribune Business sources previously suggested that a Letter of Intent (LoI) or agreement in principle, stipulating strict commercial confidentiality, had been signed with a potential buyer for the One & Only Ocean Club, with negotiations having reached the due diligence phase.

One contact familiar with Brookfield executives said the message after the 2012 debt-for equity swap that saw it assume ownership of Atlantis and the One & Only Ocean Club was: “As soon as the smoke clears, when things get sorted out with the market, we will start selling off parts of the Kerzner empire.”

Another source, familiar with current developments, told Tribune Business: “I know they’ve [Brookfield] been talking. There may well be some due diligence going on.

“There’s no secret they have to refinance their loans by September this year. My sense is if they found a buyer, and the price was right, they’d be prepared to sell a resort.”

Other sources well-connected to Brookfield and Paradise Island, though, expressed surprise that the asset manager would seek to sell off any of its Bahamian assets, especially the Ocean Club. They described the resort as “the crown jewel” in the Paradise Island stable, delivering the highest room rates and yielding the greatest margins.

Tribune Business also revealed that land surveyors have been busy on Paradise Island in early 2014, measuring real estate parcels as Brookfield prepares to deal with the $2.2 billion debt it inherited from Kerzner as part of the solution to the latter’s financial impasse.

Brookfield has effectively taken Kerzner’s place as the borrower, with the obligation to ensure all other lenders are repaid. It can either refinance the debt under new terms and conditions, pay out the existing lenders or do a combination of both.

The measurements and valuations of various Paradise Island resorts and real estate will be key to providing security for any new debt arrangement. One source said: “On the ground, there’s a lot of work being done to get to the point where that refinancing is seamless. The surveying is all part of the refinancing.”

The One & Only Ocean Club 105-unit resort has luxury suites and villas, with guests served by personal butlers.

The Ocean Club was opened in 1962 as a 52-room hotel by Huntington Hartford II, heir to the Great Atlantic and Pacific Tea Company fortune. Some $10 million was invested in the project.

The Ocean Club was sold to Kerzner International in 1994, and renamed One&Only Ocean Club in 2002 under the latter’s rebranding exercise.