The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Fears were yesterday raised that the National Insurance Board (NIB) could massively overpay for the former City Markets head office and warehouse facility, with Tribune Business told it was looking at a $9 million deal - double what a previous bidder had offered.

The property is owned by the now-defunct supermarket chain’s pension fund, and Shane Gibson, minister of labour and national insurance, confirmed to Tribune Business that NIB had been looking to acquire it to “assist” with the fund’s liquidation.

He denied, though, that the deal was proposed to solely to ‘bail out’ the City Markets employee pension fund and the supermarket chain’s owners, the Finlayson family, who are major political supporters of the current government.

And, while confirming that there were plans to convert the property into a bonded warehouse facility for Bahamas Customs if NIB purchased it, Mr Gibson said no deal had been concluded yet.

He added that NIB was seeking to get the former City Markets headquarters building appraised by a real estate firm, so it could determine its true worth and then seek to reach an agreement with the pension fund’s trustees.

Speaking on condition of anonymity, a source familiar with developments largely backed up Mr Gibson’s version of events, but added that the City Markets staff pension fund and its trustees - who include company principal Mark Finlayson - wanted NIB to pay $9 million for the property.

“The sale has not been concluded, but it’s under consideration by [the NIB] Investments Committee,” the source said.

“NIB is trying to have the property appraised. It was appraised at $9 million, and they wanted NIB to pay $9 million for the building and renovate it for a Bahamas Customs warehouse.”

Tribune Business was also told that NIB management were against the former City Markets’ head office purchase.

Further investigations by this newspaper suggest that the $9 million valuation being placed on the property stems from its last appraisal, but this was conducted in June 2009 - some three years ago.

Meanwhile, informed sources told Tribune Business that wholesaler Lightbourn Trading, which had previously been in negotiations with Mr Finlayson and the trustees to acquire the East-West Highway site, had offered a much lower price.

This newspaper can reveal that Lightbourn Trading offered between $4.5-$5 million, a value sources said was based on an appraisal conducted on its behalf by Morley Realty.

This suggests that, if NIB ends up paying the $9 million that the City Markets pension fund is seeking, it could be paying double - 100 per cent - what the property is really worth.

Some observers are already suspicious that NIB funds, which belong to the Bahamian people as retirement, industrial and other benefits, might be used to get both the Finlayson family and the Government ‘off the hook’ with respect to the City Markets staff and pension beneficiaries, who have been clamouring for what they say is rightfully due to them.

And one source said the plan to convert the City Markets head office into a Customs warehouse “makes no sense because Customs has all that space at Gladstone Road.

“There’s no business need for Customs to have a new warehouse when the warehouse on Gladstone Road is not fully utilised. You’d have to truck goods from Gladstone Road to Independence Drive.”

This newspaper has also been informed that the offices at the former City Markets headquarters are effectively unusable, and need to be demolished. The floor, which is laid over water tanks, is said to be collapsing, with a new roof also needed as the 28 year-old building starts to show its age.

In other words, NIB would also have to invest a substantial seven-figure sum - on top of the purchase price - to bring the property up to standard.

Tribune Business was told, though, that NIB is seeking to have the former City Markets building appraised by another realtor, Jim Newbold of Neubs Investments and Realty.

And, while confirming that the building could be used as bonded warehouse space for Bahamas Customs, Mr Gibson said NIB had yet to make a formal offer to acquire it as it awaited another appraisal.

He told Tribune Business: “The Government needs accommodations. City Markets building is vacant, and like every other investment we looked at the possibility of NIB purchasing the City Markets building and the Government leasing it from NIB on the same sort of lease/buy back programme as they do with other buildings.

“We are supposed to do an appraisal. I’m not sure if the appraisal was completed as yet, and that’s one of the reasons the purchasing of it was stalled as far as we are concerned.

“We couldn’t get an appraisal done or access to the building. We were supposed to purchase the building in order to assist with liquidating the [pension] fund. They have assets, but they need it liquid in order to satisfy their obligations.”

However, Mr Gibson added: “It’s not that we’re just trying to assist them. We were also in need of a building, and because we are in need and they needed help, we figured we would bring the two of those together and we would purchase the building once the Government could use it, and it was able to be purchased at a good price.”

Mr Gibson added that if the building was purchased by NIB it could be used as a warehouse for Customs.

“Customs needed additional warehouse space and we were looking at putting a bonded warehouse there,” he said.

“Customs owned the building just opposite BTC on JFK as a bonded warehouse, so we were looking at possibly giving them more space. If the building was at an acceptable price, in good condition and Customs confirmed it could use it, then we would have proceeded, but up to this day we have not made a firm decision. Right now it’s just a matter of looking at it to see if that’s something we should get into.”