The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Atlantis is closer to marrying Disney World and Las Vegas than "any other property in the world", with net cash flow having increased by 15 percent since its current owner's 2012 takeover.

Morningstar Credit Ratings, the investment analysis firm, in a July 9 assessment of the Paradise Island resort's $1.85bn debt refinancing, described it as "a unique asset" that no other Caribbean resort can match because of the breadth of amenities it offers.

"While there are numerous properties in the Caribbean that offer similar amenities as the Atlantis Paradise Island Resort, none offer everything that Atlantis does," Morningstar said. "The property is essentially a 'theme park' for adults and children, and could be considered as a cross between Walt Disney World and Las Vegas.

"While Atlantis obviously does not offer the extensive attractions [of a] Walt Disney World, or the size and lavishness of the newer casino hotels in Las Vegas, it comes closer to any other property in the world to offering both. The uniqueness of Atlantis makes it difficult to determine comparable properties."

Baha Mar may emerge as a rival to this uniqueness, but Morningstar's report argued that the Paradise Island property's historically strong operating performance and diversified revenue streams would enable it to withstand any market 'cannibalisation' by its Cable Beach rival.

"Net cash flow has increased by 28.1 percent (adjusted for rooms down for renovation)/14.9 per cent (unadjusted for rooms down for renovation) from 2013 through the trailing 12 months ended March 31, 2018," Morningstar said of Atlantis.

"Under the prior ownership, the property exhibited strong operations with a peak-to-trough decline in net cash flow of 31.3 percent. Since 2013, average annual occupancy has consistently been in the low to mid 70s with an average ADR (average daily room rate) of $281."

Atlantis's restaurants and bars generated a collective $203 million in revenue for the 12 months to end-March 2018, accounting for 26.8 per cent of the resort's top-line - a share only bettered by room revenues.

Breaking down Atlantis's other income streams, the Morningstar report noted that 60 per cent of the revenues generated by its marine and water attractions - which account for 7.8 per cent of total income - came from cruise passengers visiting the resort on day excursion passes.

The Atlantis marina generated some $8.2 million, or 1.1 per cent, of total revenues for the year to end-March 2018, while 'The Dig' saltwater aquarium added a further $1.3 million in 2017. The resort's retail offerings provided another source of income.

"Income from leased retail outlets for the [12-month] period ended March 31, 2018, was $9.2 million or 1.2 percent of total revenue," the Morningstar report revealed. "In addition, the resort generated $12.9 million of 1.7 percent of [12-month] total revenue from Atlantis owned and operated outlets.

"In addition to the above amenities, Atlantis generates revenue from additional sources including a water plant and captive tour operator, Atlantis Paradise Vacations. The water plant manufactures and supplies water to the Atlantis resort, the Reef Atlantis and the Harborside Resort. Additionally, the Atlantis water plant sells water to other property owners on Paradise Island. Previously owned by a third-party (an affiliate of General Electric), the sponsor [Brookfield Asset Management] acquired the water plant in 2015."

Financials provided in the Morningstar report showed a consistent financial performance by Atlantis through 2016 and 2017, into the 12 months leading up to end-March 2018. Occupancy levels remained above 72 percent throughout this period, with occupied room nights staying in the range between 768,000 to 776,495 per annum.

Average daily room rate (ADR) and revenue per available room (RevPAR) were similarly consistent, with total revenues inching up from $767.655 million in 2016 to $777.398 million for the 12 months to end-March 2018. Operating expenses over the same period were held either side of the $360 million mark, producing gross operating income ranging from $403 million to $413 million.

Annual net operating income for the three periods included in the report ranged from $201 million to $210.705 million, with Atlantis appraised as having a $2.49 billion appraised value as at May 7 this year.

Morningstar added that market fundamentals, as measured by the increase in stopover arrivals through Lynden Pindling International Airport (LPIA), would provide a further boost to Atlantis's business - which Baha Mar's Chinese ownership improving airlift prospects from that nation.

"According to Lynden Pindling International Airport, over 151,500 passengers landed at the airport in December 2017 and over 140,000 landed in January 2018, the largest holiday season numbers since the pre-recession holidays of 2007-2008," the report said.

"From January 2018 through April 2018, the number of passengers at the airport increased by 9.8 percent over the number of passengers from January 2017 through April 2017, putting it on track to reach its all-time highest number of passengers. This also represents a 5.9 percent increase in comparison to its prior peak from January 2008 through April 2008.

"March and April arrivals of approximately 182,000 and 171,000, respectively, also represented the highest amount of passenger arrivals in the airport's history.... In addition, with the recent opening of the Baha Mar resort and China's investment in funding its construction, Chinese airlines are expected to begin direct-service to Lynden Pindling, which opens the Bahamas to a new market of leisure and gaming travellers."