The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

THE Prime Minister last night warned that the Grand Lucayan's sale is "far from completed", and instead touted a potential $2.56 billion development at West End's former Ginn project.

Dr Hubert Minnis, in his latest national address, delivered a far more downbeat and pessimistic assessment on the timeline for the purchase and re-opening of Freeport's 'anchor property', stating that the deal will be completed "this year".

This contradicts his optimistic statement, issued on the Friday before Christmas, that indicated an end-February 2018 deadline for the Grand Lucayan's purchase by the Toronto-based Wynn Group to close.

"I am delighted to tell the people of Grand Bahama, and the people of the Bahamas, that our plan for Grand Bahama is well underway with the private acquisition and management of the Grand Lucayan assets, including the hotels, the golf courses and the casino," Dr Minnis said, starting off in an upbeat mood. This, though, was transformed in the next line, which was somewhat contradictory. "Although this transaction is far from completed, it would not be an exaggeration to say that we will have accomplished in a few months what was not done in a decade," he added. "This year, we intend to complete the sale of the Grand Lucayan and Memories property."

The Prime Minister's comments are likely to be seized upon by his political opponents as an indication that the Grand Lucayan's re-opening, deemed the most critical short-term step to reviving Freeport and Grand Bahama's wider economy, still has some distance to go before becoming a reality.

There was also nothing to explain what Dr Minnis meant by his statement that the Government "will have accomplished in a few months what was not done in a decade", although this may refer to his administration's desire to transform Freeport - and particularly the Lucayan Strip - into a destination experience.

The Prime Minister's more sober assessment also came after Tribune Business sources yesterday suggested that Wynn was using the Government's desperation to get the Grand Lucayan re-opened as leverage to extract more tax concessions and marketing subsidies.

"Wynn is going to end up owning the hotels, and the Government is going to pay for it," one well-placed contact, speaking on condition of anonymity, told this newspaper. "Instead of buying that hotel last year at a price they should have extracted from Hutchison, they've left it to an investor who has got them by the neck and time is marching on.

"By not acting last summer, they've put themselves in a complete mess. Unbelievable. The town is dying."

The Government's internal PR agency, Bahamas Information Services (BIS), sought to place a more positive angle on the Grand Lucayan situation following the Prime Minister's speech by describing Wynn executives as "on the ground in Grand Bahama".

They were said to be meeting with government officials, while its technical team was conducting due diligence on the resort. Executives from Sunwing, the tour operator affiliated with the Memories brand that previously operated one of the three Grand Lucayan properties, were said to be doing the same thing.

The amount of investment incentives, subsidies and marketing support sought by Wynn was a key factor in sinking negotiations with the Government last year over its initial $110 million Grand Lucayan offer.

The Minnis administration wants to wean Grand Bahama off the long-standing subsidies that have supported its tourism product, as this means the industry is effectively being financed by the Bahamian taxpayer.

Wynn subsequently returned with an all-cash $65 million offer, and terms that were seemingly acceptable to both the Government and the Grand Lucayan's owner, Cheung Kong Property Holdings. A Letter of Intent (LoI) was signed with the latter, and Heads of Agreement talks have begun with the Government.

The strategy is for Wynn to adopt the role of "absentee landlord", owning the real estate and contracting world-class operators and resort brands - with the ability to attract travellers and airlift - to manage the hotels.

Memories is among the leading candidates, and Tribune Business was yesterday told that franchise brands such as Bob Marley and Harley Davidson are also in the mix when it comes to reviving the Grand Lucayan under Wynn. The involvement of such brands is being demanded by the Government before it enters into a Heads of Agreement.

The Prime Minister last night devoted more of his address to developments at the former Ginn project in Grand Bahama's West End, which some observers interpreted as an attempt to distract from the 'cooling' at the Grand Lucayan.

He said Grand Palm Beach Acquisitions had signed a sales agreement to purchase the property from a combination of Lubert Adler, Ginn's former financing partner, and the Credit Suisse-led lending consortium that owns the development's real estate component.

"Grand Beach Acquisitions will construct, repair, revitalise, develop and operate 246 rooms in three hotels; a banquet facility; 116 branded hotel residences; 1,000 other residences; a hotel/casino site; approximately 150,000 square feet of shops and restaurants; a spa and wellness retreat; two marinas; an 18-hole golf course including driving range; an IFR-rated airport; a resort hospitality training academy; and an organic farm," Dr Minnis said.

"Grand Palm Beach Acquisitions intends to repair, revitalise and develop the property, to be known as 'Bahama Bay', in nine phases over a 10-year period with a projected expenditure of $2.56 billion."

Dr Minnis said the project was now before the National Economic Council (NEC) for 'approval in principle' which, if given, would result in Heads of Agreement negotiations with the relevant government agencies.

There is considerable scepticism in the Bahamas over such 'mega resort' projects, and several Tribune Business contacts pointed out that the benefits from 'Bahama Bay' will take several years to properly materialise.

They added that Freeport and the Grand Lucayan, not West End, should be the Government's priority, one saying: "West End is one thing, but the whole of Freeport is on life support."

Tribune Business revealed last year that Skyline Investments, a Toronto-based real estate developer/investor with $500 million in assets under management, had emerged as the former Ginn project's potential purchaser and the entity behind Grand Palm Beach Acquisitions.

Skyline Investments, which is listed on the Tel Aviv Stock Exchange, describes itself on its website as having $500 million in assets. It specialises in real estate investment and development related to the hotel/resort industry.

It describes itself as "sourcing new acquisition opportunities to grow and diversify its cash flow in North America", with an emphasis on geographical diversification.

Current properties include the Hyatt Regency at The Arcade in Cleveland; the Renaissance Cleveland Hotel; Bear Valley Ski Resort in California, plus a variety of mixed-use resort developments throughout Canada.