The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Democratic National Alliance’s (DNA) ex-leader yesterday urged the government to use its influence to ensure “the right buyer” is found for Paradise Island’s Atlantis resort.

While acknowledging that the Minnis administration cannot interfere in a private sale, Branville McCartney told Tribune Business that it could seek out developers and operators with the experience of owning/running mega resorts and point them in Brookfield Asset Management’s direction.

International reports that the Toronto-based asset manager is seeking to sell Atlantis are of little surprise and nothing new, given that Tribune Business reported in February how a previous purchase backed by Qatar’s sovereign wealth fund had fallen through.

That, though, confirmed that Brookfield is willing to sell if it gets its price and the correct deal. Mr McCartney, though, argued that the Government should not sit idly by during any sales process given the importance of Atlantis in terms of employment and the Bahamian economy’s overall well-being.

He added that the fact any purchaser would have to negotiate a Heads of Agreement with the Government gave the Minnis administration some leverage, as well as the Most Favoured Nation (MFN) clause in Atlantis’s current deal that ensures the resort is treated no less favourably than any rival properties.

The former DNA leader added that The Bahamas needed to ensure a new owner was a resort developer with the capacity to grow the Atlantis brand, rather than any “fly by night” entity that would seek to flip the property for profit several years later.

“There’s a clause that runs with that particular property, an MFN clause, no matter who owns it. We’ve seen it with Kerzner International, and then with the new owners,” Mr McCartney told Tribune Business. “With that clause being there, it’s incumbent that the Government takes a closer look.

“I know it’s a private entity and the Government may not be able to direct who purchases the property, but they can influence and have some input over who gets it as they will have to negotiate with the buyers a lot with that clause. That should give the Government some leeway.

“The property is so significant to the economy of the country, so the Government ought to take a clear look at who the purchasers are or influence persons to look at the property if Brookfield wishes to sell,” he continued.

“Atlantis, because of its employment and contribution to the economy, you want to ensure the owners of that property are sound, legitimate and will continue to build the brand. You don’t want a fly-by-night person coming there; you want a person who will improve the product substantially so, at the end of the day, it benefits The Bahamas.

Mr McCartney added that Atlantis, with its already-recognised brand name and prime location on Paradise Island, should not prove a difficult sell despite Baha Mar’s presence nearby.

Pointing to recent reports of high Atlantis occupancy levels, he said The Bahamas’ recent “double digit” increases in arrivals and visitor spending should reassure potential buyers that the two high-end resorts have not spilt the market for premium visitors as many had feared would happen.

“Tourism has been on the increase for The Bahamas as a whole. If there’s a time to sell, now’s a good time for that type of business,” Mr McCartney told Tribune Business. “We want the right buyer who will increase the brand, grow the brand internationally.

“You don’t want an entity in it for investment purposes who will flip it a few years down the line to make money. You want a Sir Sol Kerzner to build the brand and enhance it; those persons who are in the business of resort development, not buying a property and selling it.”

Brookfield Asset Management holds $330bn of global real estate and other properties, among which is Atlantis. More an asset manager of underlying real estate, hospitality and resorts are not its speciality, whereas retail and commercial office space are. It is also thought to have become much more involved in Atlantis’s day-to-day operations than it likes.

Brookfield has also twice refinanced Atlantis’ debt, the last transaction occurring in mid-2018, and previously sold the Ocean Club to Len Blavatnik’s Access Industries to raise principal to pay down that debt.

Morningstar Credit Ratings, the investment analysis firm which assigned the highest ‘triple-A’ rating to the most senior financing tranches in Atlantis’s last $1.85bn refinancing, revealed in a July 2018 report that the resort “feels strongly” that Baha Mar’s emergence will not impact its long-term performance after net operating income jumped 27 percent for the 2018 first quarter.