The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Old Bahama Bay’s owner was yesterday seeking a “trustworthy” new operator after repossessing the resort to facilitate its sale for the former Ginn project’s $2.8bn redevelopment.

Lubert Adler, the US real estate financier, confirmed in a statement it had secured the West End property late on Monday at the second attempt after previously encountering resistance from the condominium owners who had leased it for six-and-a-half years.

It added that a new operator is now being sought to manage Old Bahama Bay and its amenities to both preserve the resort’s existing 103 jobs and facilitate its sale to Skyline Investments, the Toronto-based developer that is in the process of acquiring the 2,000-plus acres that represented the former Ginn project.

While the condo owners’ company, Island Ventures Resort & Club (IVRC), will continue to manage Old Bahama Bay until a new operator is found, Lubert Adler’s statement made clear it sees no future in working with them.

The US real estate financier is understood to have “lost faith” in IVRC and its president, John MacDonald, after they initiated Supreme Court proceedings to block the repossession and subsequent sale to Skyline despite having previously accepted their lease’s termination by Lubert Adler was valid and agreeing to vacate.

“Lubert Adler was able to secure their facilities late yesterday [Monday], despite intervention by third parties who are not privy to the lease agreement and are trying to compromise the intended sale of Old Bahama Bay to future developers,” the financier’s statement said.

“Lubert Adler secured their assets yesterday and are working with IVRC and the Government to transition the remaining properties, while maintaining operations until a new, trustworthy, operator can be found - or a sale is finalised.”

The term “trustworthy” appears to be a not-so-subtle strike at IVRC and Mr MacDonald, given that he seemingly agreed to co-operate with Lubert Adler and the lease termination in a September 17, 2018, interview with this newspaper.

“They do not want to deal with IVRC because they’ve lost faith in them as a result of what they’ve done,” a source familiar with Lubert Adler’s position, speaking on condition of anonymity, told Tribune Business.

“They’re allowing IVRC to stay until they’ve checked all their people in and made alternative arrangements. Lubert Adler is trying to find and independent and trustworthy operator to keep people employed in the meantime. It’s a day-to-day [with IVRC] until they can find someone else.

“Everything has been secured now. They were allowed to do what they needed to do, and followed the law. The Government asked them to do that, but they don’t want to work with Mr MacDonald. They’re working with the Government to ensure the sale goes through. The Government is stuck; they don’t want to lose the jobs, but at the same time the sale can’t close until IVRC are out.”

Another source, close to developments and also speaking on condition of anonymity, confirmed that IVRC had been allowed for the moment to operate Old Bahama Bay’s 72-slip marina and “front desk” only. The condo owners also retain ownership and all related rights to their units.

“Everything else has been locked down. They’ve changed the locks and repossessed the amenities,” the source said of Lubert Adler’s move, which was implemented on Monday by its local agents and a team from Candid Security.

This was the second repossession attempt, as the first - made on Saturday - was successfully blocked by Mr MacDonald and his supporters, who summoned the police. The source said that while there was “all sorts of resistance, threats and meanness” on Monday, Lubert Adler’s agents ultimately prevailed after producing documents showing the lease was correctly terminated.

“Once they made it clear they weren’t leaving, and the police were satisfied they had a legitimate reason to do what they were doing, they stepped aside and said they would make sure there was no violence,” the source added.

“They [IVRC] were told they had to leave. The issue is both parties want them out. The seller [Lubert Adler] wants them out, and the purchaser wants them out. They don’t want to work with MacDonald.”

Lubert Adler, in its statement, reiterated that the “lease has been lawfully and properly terminated” with the correct notice given to IVRC. It previously released an October 1, 2018, letter from Sophia Rolle-Kapousouzoglu, IVRC’s attorney at Lennox Paton, which appeared to confirm that the condo owners’ company would comply with the second termination notice.

While IVRC had disputed the validity of the first notice, issued on August 17, 2018, Mrs Rolle-Kapousouzoglu told Michael Scott, Lubert-Adler’s attorney, that her client intended to comply with the second one.

“Please be advised that IVRC intend to fully comply with Section 28.01 by surrendering the property at the sooner termination of the term, but not prior,” she wrote. “In that regard we affirm our acknowledgement of the Section 2.01 Notice to Terminate dated September 7, 2018.”

Mr MacDonald did not respond to an e-mail sent to his personal address seeking comment before press time last night, but Lubert Adler said it had permitted IVRC to keep Old Bahama Bay open on very favourable financial terms following the signing of their June 1, 2012, lease.

“Lubert Adler leased its assets for over six years to IVRC at a very favourable rate in order to support the ongoing operation for the benefit of the condominium owners and the employees of IVRC,” it added. “During that period IVRC and the condominium owners took 100 percent of the profits for their own benefit from the marina, restaurants leases, etc.”

Tribune Business sources said IVRC was required to “pay a notional rent and be responsible for maintenance” at Old Bahama Bay under the lease’s terms. They suggested this had allowed the condo owners to fund their units’ maintenance and other support through the revenues generated by the resort’s amenities, describing this as “a gravy train” that has now been cut off by Lubert Adler’s repossession.

However, IVRC and Mr MacDonald yesterday received backing from former West End MP and ex-minister of tourism, Obie Wilchcombe, who urged the Government to intervene to guarantee the continued employment of Old Bahama Bay’s 100-plus staff until there was greater clarity over the Skyline deal and its completion.

He argued that, while there had been much talk about Skyline’s $2.8bn proposal there was nothing to suggest a deal was “imminent” - going so far as to suggest no sales agreement had been signed, even though two closing dates have now been missed.

Calling on the Minnis administration to “help both sides work out their differences so we can have harmony”, Mr Wilchcombe said: “That’s 100 jobs. That’s the least we can afford, not only in West End but Grand Bahama.

“When MacDonald and those were faced with shutting or continuing to operate the resort [after Ginn’s default], they kept the place going and people working. They were contributing as corporate citizens.

“I don’t like the atmosphere right now. The environment is not getting more harmonious. What they’re doing is working against harmony. They’ve [the Government] got to work for the betterment of the island, as this island needs all the help it can get.

“We have to commend Mr MacDonald as he kept the place open, and is making another investment. He’s ready to go.” Tribune Business revealed on Monday, though, that questions were being asked over whether any applications for the necessary investment approvals for that project, the 460-unit Grande Harbour development, have been made to the Government.

“Once the deal is done, and Skyline comes up with the funding and completes, we can move on but we’ve seen nothing yet,” Mr Wilchcombe said. “Let what exists today continue in the interests of us all.

“I’m really disappointed that the Government hasn’t stepped up or said anything at this point. People in the community are wondering what is going on, who’s speaking for us, standing for us? Nobody is explaining anything to them. They don’t know what is happening from one day to the next.

“One day one group of security people come and put locks on the development; the next day it’s another,” he added. “It’s a fragile economy and everyone is fearful we will lose what little we have now. Everyone wants to see progress but until we get there, work with what we have that’s providing stability in the area.

“Don’t hit what we have now. Do we wish to send 100 people home? My God.”

Tribune Business understands that IVRC and Mr MacDonald are still seeking a date before the Supreme Court for their legal action, filed last Thursday, to be heard. They want to obtain an injunction Order preventing Lubert Adler and Skyline from “interfering or attempting to interfere” with the Old Bahama Bay assets covered by the lease agreement.

IVRC’s summons, seen by this newspaper, also wants the Supreme Court to prevent Old Bahama Bay’s current and potential new owners from “evicting or attempting to evict” it from these leased assets, which include the 72-slip marina, gasoline station, retail and restaurants, reception area and other facilities essential to a properly-functioning resort.

They are effectively asking the Supreme Court to maintain the Old Bahama Bay status quo until it can give a “final determination of the rights and obligations” of all parties in relation to the original lease deal they made with Lubert Adler.

Alternatively, they are seeking an Order that a new lease be “entered into” by IVRC and Skyline for Old Bahama Bay’s operation and management that gives the condo owners and their tenants “rights of access and use of various common areas” at the resort. Until that happens, the condo owners want the Supreme Court to rule that they continue to “manage and operate” the assets governed by the existing lease.