The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Thanksgiving 2017 is likely the earliest date that Baha Mar can be fully open and operational, one of its potential purchasers has predicted.

Andrew Farkas, who has partnered with Sir Sol Kerzner in a bid to acquire the troubled $3.5 billion development, told Tribune Business that construction could resume in June 2016 if a deal could be struck now.

He estimated that physical completion of the Baha Mar resort campus, plus the re-hiring of staff, marketing and other essential pre-opening activities, would take about a year.

That places Baha Mar’s construction completion at around June 2017, a date that is at the start of the “slower” summer tourism season.

With visitor numbers down, Mr Farkas said any new Baha Mar owner would likely elect to reduce “negative cash flow” by postponing the Bahamian Riviera’s full opening until the peak 2017 winter tourism season - Thanksgiving and Christmas.

“My personal opinion is that the project, to get it back on its feet, finish the construction, re-staff, re-train, develop and implement an appropriate marketing programme, you will need a year,” Mr Farkas told Tribune Business.

“You really need a year before this thing is totally ready to open its doors. You may be able to open component parts in less than a year, do it piece by piece, but the whole thing will not be ready and fully open for a year in my estimation.”

These projections suggest that it will be another 21 months, at least, before Baha Mar is fully open. This date is also well beyond when most persons expect the next general election to be held in May 2017.

Mr Farkas, chairman and chief executive of Island CAPITAL GROUP, a real estate merchant bank with more than $100 billion under management, said much depended on when Baha Mar’s financier, China Export-Import Bank, reached agreement with a buyer or new investor to move the project forward.

“If someone were able to complete the transaction, acquire the various [land] parcels and take control by June, you’re not really going to see this open in any meaningful way until season 2017; call it Thanksgiving 2017,” Mr Farkas said.

“I doubt it will be feasible before then. The last thing you want to do is open it offseason.”

He continued: “The reason I think it’s not feasible is that under the best of circumstances, if the bank picked a partner by the end of this month, it would take several months to get the paperwork in order.

“June is probably aggressive [for a construction start], but if they could do it then completing construction, figuring out the restaurant and retail concessions, the hotel brands, who’s running the gaming operations, and figuring out a well-designed and appropriate marketing programme, is going to take about a year.

“If you start in June, you could be opening in June the following year, but you’ll be burning much more negative cash flow than if you wait until the start of the [winter] season.”

While conceding that it might be possible to open “parts” of Baha Mar earlier, Mr Farkas added: “I don’t know what the economics of doing so would be.

“I am still in a position where we have not been provided with any of the information by any of the parties.”

Mr Farkas agreed with the China Export-Import Bank, the development’s $2.45 billion financier, about the need to quickly resolve Baha Mar’s fate given that the value of its real estate assets were deteriorating with each passing day.

“Real estate doesn’t do well sitting vacant and inert,” he told Tribune Business. “It’s a living, breathing organism. It needs to be cared for, and utilisation needs to run through its veins. Just sitting there and wasting away doesn’t do anything for it.”