The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The BISX-listed Bahamas Property Fund yesterday revealed it is mulling the development of a car park that would solve one of downtown Nassau’s major “limitations”.

Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business that much depended on finding the right potential site for such a facility.

Also the Fund’s administrator, Mr Anderson said there were numerous companies and properties in the downtown Nassau area who lacked parking and were constantly searching for such facilities.

With this strong pre-existing demand, the RoyalFidelity chief expressed optimism that the Property Fund would be able to rent spaces before construction was completed, giving it predictable income from a strong client base.

Suggesting that the plan could make downtown Nassau a “more attractive location” for companies, Mr Anderson said parking options would become more limited with the new US Embassy’s construction, which will eliminate the existing area opposite CIBC FirstCaribbean International Bank’s headquarters on Shirley Street.

“There is a need for parking downtown, so we are looking at the possibility of trying to find a decent site for it,” Mr Anderson told Tribune Business.

“What we know is there are a number of properties downtown that don’t have parking, and are continually looking for parking. I think we could rent parking spaces to buildings as opposed to individual tenants. I’m not trying to get into the speculative market.

“I’m more trying to get into something we comfortable we can rent, and rent before we complete construction, just like real estate.”

The construction and development of its own wholly-owned, purpose built parking facility would mark something of a departure from the Bahamas Property Fund’s traditional business model.

It has evolved from acquiring existing high-end properties targeted at a specific niche, such as the Bahamas Financial Centre (Charlotte Street in downtown Nassau); One Marina Drive (Paradise Island’s only office building); and Providence House (PricewaterhouseCoopers headquarters) on East Hill Street.

The potential parking facility would mark the first time it has constructed and developed its own property, yet financially it remains well-equipped with net equity of $32.813 million at end-June 2017, some $20.778 million of which is retained earnings.

“It’s just a matter of looking at where the best spots might be,” Mr Anderson added. “It might even make downtown more attractive to companies, as it takes away some of the parking limitations.

“That’s what we’re focusing on. There’s not a huge number of transactions that take place in property in this town, so we have to find opportunities where we can.”

The Property Fund’s project, if it comes to fruition, would also address a vital component to downtown Nassau and Bay Street’s potential revitalisation, namely the provision of adequate, sufficient parking spaces.

Inadequate parking has long been viewed as a key factor influencing Bahamians and residents from coming to downtown Nassau to shop, resulting in the area largely catering to cruise ship passengers and other visitors.

The proposed parking lot will also enable the Property Fund to diversify away from its core business, where relatively low occupancy rates - 70 per cent at the Bahamas Financial Centre, and 60 per cent at One Marina Drive - have frustrated its efforts to deliver profitability and shareholder value in recent years.

It produced a 33.8 per cent year-over-year net income increase for the 2017 first half, jumping from $507,214 to $678,654. The rise was driven by a $170,000, or near-25 per cent drop in the Property Fund’s share of common area maintenance (CAM) costs from $684,064 to $514,625.

Mr Anderson, though, told Tribune Business that the improved profitability was due more to an overall reduction in CAM costs than an increase in vacancy rates.

“Overall, we still have relatively high vacancy rates across our properties with the exception of Providence House,” he explained. “We haven’t really seen any huge demand.

“We’ve seen some interest from the Government from time to time. We’ve had some discussions with ministries about potential relocations, but we’ve not finished anything.”

Mr Anderson added: “It’s just a tough market to sell into. We’ve had high vacancies for some time. Those people who needed to rent have gone out west.

“There’s not a huge interest for companies to rent in town. Maybe that’s part of a bigger trend of companies getting out of town. From the recession in the late 2000s it’s taken hold and they’ve not come back.”

Mr Anderson confirmed that RoyalFidelity was assessing the potential acquisition of a property located on the outskirts of west Nassau, although he declined to identify it.

“The company is doing fine,” he added of the Property Fund, “but it’s not been able to reach its full potential because of these higher vacancy rates. We’re doing reasonably well off the back of relatively low occupancy rates.”

The Property Fund owns 150,000 square feet of corporate rental space, although two-thirds or 100,000 square feet is concentrated at the Bahamas Financial Centre, making it the most important to its performance.

Mr Anderson said it had commissioned several studies on the potential of converting the Financial Centre’s ground floor spaces to retail use, especially after FINCO closed its branch location.

“We’ve had retailers potentially expressing interest, but have not been successful in tying down anybody,” he told Tribune Business. “We’ve looked at opening up entrances from the road side as opposed to going through the lobby, so retail customers do not have to go into the building.

“We’ve had various studies done, and we’re waiting for one at the moment in terms of the potential uses might be. We’ve not determined what space might be suitable.”