The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A $12-$14 million investment is needed to transform the former City Markets head office into a commercial office building suitable for rent, after efforts to find a buyer proved “virtually impossible”.

Mark Finlayson, the former supermarket chain’s president, yesterday said the property’s “deteriorated” state required a major investment by Associated Bahamian Distillers and Brewers (ABDAB), the company in which his family remains the largest shareholder.

Tribune Business reveals today how ABDAB has effectively taken over control of the property from the City Markets pension plan in exchange for preference shares, securing the $4.7 million obligation to beneficiaries in a more liquid investment that should payout what is due to them after a two-three year wait (see other story on Page 1B).

Mr Finlayson yesterday implied that the strategy change had been forced upon the parties after efforts to interest Bahamian retailers and wholesalers in the purpose-built facility, which includes a large warehouse, proved fruitless.

With many in the sector expanding in anticipation of increased business from Baha Mar, the pension plan’s trustees thought the former head office would have been attractive to trade buyers, but most either decided to expand their existing premises or build new ones from scratch.

“The sale of that property has been proven to be virtually impossible,” Mr Finlayson told Tribune Business. “We negotiated with Bahamas Wholesale Agencies and Thompson Trading; they started their own buildings.

“We negotiated with Bahamas Food Services, and they decided to expand [on Gladstone Road]. Everybody is involved with future growth for Baha Mar. Everybody took a look at it and decided against it.

“The trustees tried to come to an agreement. That building was deteriorating, and the value lessens every day, so it was better for us to give something [the preference shares] more suitable in ABDAB and related companies.”

Disclosing plans to convert the former City Markets head office into a commercial office space, Mr Finlayson told Tribune Business: “Investment has to be made in that building.

“The building has deteriorated to such an extent that it doesn’t make sense for them [the pension fund]. ABDAB is going to invest some money in that building so that we will be able to get it rented out.

“The building is going to require somewhere between $12-$14 million to get it to a state where it can be rented as a commercial office building instead of a warehouse.

“That’s where we are right now, and at the end of the day, ABDAB has the wherewithal to do it and make sure the beneficiaries are paid.”

Tribune Business previously revealed that efforts to sell the former head office building to wholesaler Lightbourn Trading also resulted in failure, while the National Insurance Board’s (NIB) interest also cooled.

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

This price was offered because the offices at the former City Markets headquarters were already deemed unusable, and needed to be demolished. The floor, which is laid over water tanks, was said then to be collapsing, with a new roof also needed as the 28 year-old building starts to show its age.

Mr Finlayson, though, disputed the purchase price, arguing that to accept what he described as $3.8 million would have been “an absolute breach of trust” when it came to the obligation owed to the pension beneficiaries.

NIB then emerged as a prime candidate to purchase the property, obtaining appraisal values that placed its worth between $7.2 million and $9.9 million - significantly above those provided to Lightbourn Trading.

However, the deal foundered after Bahamas Customs - which had been lined up to rent the building from NIB - changed course, saying it no longer had any use for the property.