The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BAHA Mar is another example where Bahamians are potentially left “holding the bag” over a major real estate transaction, the Democratic National Alliance’s (DNA) leader has warned.

Branville McCartney told Tribune Business that successive administrations had neglected to require that the former Government-owned land at Cable Beach be returned to the Bahamian people if the $3.5 billion project either failed to complete or meet key obligations.

The DNA leader admitted that it was “a bit concerning” that a Chinese state-owned entity might be in a position to foreclose on the project, and take possession of the real estate upon which its $2.4 billion loan is secured.

A China Export-Import Bank ‘takeover’ of Baha Mar, a project to which it has acted as main debt financier, would have major implications for Bahamian sovereignty, the economy and tourism sector due to its ownership by the Beijing government.

“It goes back to the administration negotiating almost a give-away of Bahamian land, and not having in place where the land can be returned to the Bahamian people. This is, unfortunately, an example of that,” Mr McCartney told Tribune Business.

“That is prime property in the Bahamas; perhaps some of the best property in the Bahamas. This is a project that sits on about 1,000 acres of Bahamian property. We have a situation that is so uncertain about the eventual ownership of this property; what’s next if it doesn’t come to fruition?”

He added: “I think this is a lesson in terms of foreign investors coming into the country. Especially when it comes down to land, we must be very cognizant of the role of the land, and ensure that when we negotiate with those coming into the country, it is ultimately in the best interests of the Bahamian people, the best interests of the Bahamas.

“Many foreigners come to the Bahamas to make money. That’s not necessarily a bad thing, but we’ve seen it over and repeatedly how investors come into the country, pull out and ultimately leave Bahamians holding the bag.

“We ought to make provisions that that does not happen again. We ought to make sure that when we negotiate, the ultimate benefit is for the benefit of our country.”

Baha Mar has yet to fall into the category that Mr McCartney is referring to, and there are signs that talks between the developer (Izmirlian family), China Export-Import Bank and the contractor, China Construction America, are nearing crunch time.

Given that it is seemingly in the interests of all parties to ensure the $3.5 billion Baha Mar project is completed, many observers feel some kind of deal will be worked out. They feel it is an issue of ‘when and how’, not ‘if’.

Yet concerns about a Chinese foreclosure, and takeover, of Baha Mar are nothing new. A prime reason for Morgans Hotel Management Group withdrawing from the project was the inability of Baha Mar to get an agreement from the Chinese that its Mondrian brand would remain if they had to foreclose.

China Export-Import Bank’s $2.4 billion loan, which is secured by the various land parcels and properties at Cable Beach, is already equivalent to the debt load that ultimately forced Kerzner International to cede ownership of Atlantis and the One & Only Ocean Club to Brookfield Asset Management.

Mr McCartney’s comments, meanwhile, also allude to the fact that the Bahamas is littered with half-finished, abandoned tourism and real estate development projects.

This has resulted in prime Bahamian real estate being tied-up for years, either in litigation or because it has passed into the hands of a party (usually the financier) that has little use for it and is unsure how to move forward.

This ultimately results in the Bahamas, and its people, being deprived of the benefits of their most valuable real estate for years at a time.

Meanwhile, Mr McCartney warned that Baha Mar “cannot be allowed to become a failure”, adding that it would be “travesty” for the Bahamas were it to occur.

He urged the Christie administration to do whatever was necessary to ensure Baha Mar’s success, even if this meant renegotiating its various agreements with the Government; dividing the property up; and bringing in new brands and investors.

“This is a very sad situation; this is a very unfortunate situation for our country,” Mr McCartney said of Baha Mar’s recent travails. “The last time we heard from the Prime Minister was when he said there was some good news for Baha Mar. That was one-and-a-half weeks ago.

“We haven’t heard the good news yet. The concern is that with 2,000 Bahamian employees, it’s going to be unsustainable [for Baha Mar] to continue carrying that burden.”

Mr McCartney described the impact from Baha Mar’s four-month construction standstill as “multi-faceted”, and one that was percolating throughout the Bahamian economy and society.

The DNA leader pointed to the numerous Bahamian entrepreneurs who had invested “tremendous amounts of money” in setting-up retail and restaurant outlets at Baha Mar.

They have been unable to obtain any investment returns, and may already be under pressure over bank repayments. Then there were the Bahamian contractors, and those they had hired, who were still waiting to receive multi-million dollar payments.

“I just hope we can get out of it,” Mr McCartney told Tribune Business. “There has been some damage to the Bahamas’ brand already, no doubt about that, in terms of the opening being postponed three times. Nothing has come to fruition.”

He argued that the Bahamian people had been “blinded” as to what was happening with Baha Mar, and added: “I think the Prime Minister must make every effort possible to make sure this project gets off the ground.

“The Government must use everything they have to ensure this project gets moving, it is completed and is a success. This cannot be allowed to become a failure, even if it entails re-negotiating; if it entails dividing that property up and bringing in other named brands.

“We cannot allow that property, the full facility, go to naught. That would be a travesty.”