The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Top Brookfield Asset Management executives were last week tight-lipped over the One & Only Ocean Club’s future, with several well-placed sources suggesting to Tribune Business it was entertaining potential buyers for the resort.

Both George Markantonis, Brookfield Hospitality’s president and managing director, and the Canadian-headquartered asset manager’s main spokesman, Andrew Willis, offered the standard “no comment” when asked by Tribune Business whether the ultra high-end Paradise Island property was on the market.

Contacted by e-mail, Mr Markantonis responded: “I really don’t have any comment on this subject right now.” Mr Willis told Tribune Business via telephone: “Our corporate policy is we don’t comment on rumours and speculation. No comment from Brookfield.” Neither denied what was put to them.

However, multiple well-placed Tribune Business sources suggested that Brookfield is actively mulling the Ocean Club’s future. Some suggested that a Letter of Intent (LoI) or agreement in principle, stipulating strict commercial confidentiality, had been signed with a potential buyer, with negotiations having reached the due diligence phase.

“There’s a lot of sip sip,” one source said of talk surrounding the Ocean Club. And several contacts well-connected to Brookfield’s Paradise Island assets suggested to this newspaper that the asset manager may be prepared to part with them if the price was right.

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.”

This newspaper’s source said it was unclear whether Brookfield executives were referring to undeveloped land parcels on Paradise Island, or to specific properties such as the Reef, the Cove or the One & Only Ocean Club.

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 can also reveal 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.”

Kerzner International secured a 15-year management agreement to continue operating the Ocean Club as part of its One & Only brand collection. The 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.