The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is set to acquire the UBS (Bahamas) headquarters building on East Bay Street, Tribune Business can reveal, with the deal including the purchase of the ‘annex’ building and vacant land stretching all the way to Shirley Street.

John Rolle, the Ministry of Finance’s financial secretary, in confirming the transaction indicated that the Government had created a special purpose vehicle (SPV) that will be used for real estate purchases on its behalf.

Contacted via e-mail after Tribune Business was tipped to the purchase, Mr Rolle said the acquisition of UBS House and affiliated properties was part of a wider strategy to reduce the Government’s costs associated with leasing property.

It typically rents, rather than owns, its real estate, and the UBS deal effectively indicates a change of plan with regard to its property management strategy as it seeks to save dollars wherever it can, due to the strained fiscal position.

“It is in keeping with the need to meet the longer-term accommodation needs of the public sector, recognising that the Government expends considerable financial resources each year on office leases,” Mr Rolle said of the impending purchase from the Swiss bank.

He initially described the transaction and resulting ownership change as “a public-private partnership (PPP) arrangement to be kept at, and managed in, a professional and arm’s length fashion”.

However, in a subsequent e-mail, the financial secretary told Tribune Business: “It is more accurate to say that the Government is sponsoring a vehicle to purchase property.

“The assigned income from the leases will pay for the property...... Details will be published in due course.”

Tribune Business yesterday confirmed that UBS (Bahamas) disposal of its real estate assets has yet to close, although the sales agreement with the Government has been signed and is awaiting completion.

Mr Rolle did not disclose the purchase price and terms of the deal, but Tribune Business reported last year that UBS (Bahamas) had been seeking more than $22 million for its three-storey headquarters building and two other properties combined.

Larry Roberts, Bahamas Realty’s chief executive, who has been marketing the property on UBS’s behalf, declined to confirm the Government as the buyer.

“Yes, there is a sale in the works,” he told Tribune Business. “There’s not a signed agreement yet; it takes time.

“I’m not in a position to say who is purchasing because an agreement has not been signed.”

It is unclear whether the Government is paying the full price for the UBS (Bahamas) real estate assets, and the purchase - and associated expenditure - is likely to raise some questions, given the $6.2 billion national debt, dire fiscal position and the recent demands imposed by Hurricane Joaquin.

If the deal closes, this will be the second international bank whose Bahamian head office has been taken over by the Government. The Prime Minister’s Office and Ministry of Finance are now based in the ex-SG Hambros Bank & Trust premises.

The Government also beat off private sector competition to acquire the UBS (Bahamas) real estate, including the BISX-listed Bahamas Property Fund.

Michael Anderson, the RoyalFidelity Merchant Bank & Trust president, who acts as the Fund’s administrator, told Tribune Business: “We tried to buy the UBS annex building, and the Government bought it for the Securities Commission.

“We got to the finish line, and the Government bought both the annex and the UBS building on Bay Street. We only wanted one building; we didn’t want the second one.”

Mr Roberts confirmed that Bahamas Realty was “talking” to the Securities Commission when questioned by Tribune Business.

While it appears that the Securities Commission will soon be relocating from its current location at Charlotte House in downtown Nassau, it remains to be seen whether other non-Central Bank financial services regulators will be following them.

The UBS annex building already houses the Utilities Regulation and Competition Authority (URCA), and will probably be the new home for UBS (Bahamas) remaining operations once the Government’s purchase closes.

Tribune Business understands that the planned real estate sale stems from the bank’s decision to close down its Bahamas-based private banking unit.

It is unclear how many UBS (Bahamas) staff were released as a result, but Tribune Business understood at the time the closure was announced that the maximum number of jobs that could be impacted was around 30.

Having significantly reduced its staff complement to-date, it is understood that the bank no longer needs the space provided by UBS House to operate.

Its headquarters building, the UBS Annex and a separate site for future real estate development were all marketed as ‘UBS Office Park’ by Bahamas Realty.

Mr Roberts previously told Tribune Business that the Swiss banking giant was seeking $12.8 million for UBS House, and a further $8 million for the UBS Annex.

“It’s all office, Class A office space. They can be leased. The UBS Annex is now pretty much fully leased. They have two smaller areas available still. UBS House will be 100 per cent available for sale and lease,” said Mr Roberts at the time.

UBS House was marketed as a three-storey trophy office building with a total rental area of 33,162 square feet, and a 240 space car park.

UBS Annex, which sits at the rear of the bank’s corporate office on East Bay Street, was marketed as a ‘two-storey, class A’ office building with 23,544 square feet of office space and 162 car parking spaces.

The commercial development site was on the market for $1.4 million, taking the total purchase price sought to $22.4 million.

The total area consists of about 56,876 square feet or 1.31 acres, with 247.8 linear feet of frontage on to Shirley Street.