The Tribune

* South Abaco developer investing under 2% of $718m outlay

* Defends $250m 'pre-sale' target and rejects 'speculation'

* Argues activists financing 'obsessed' because case 'weak'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A south Abaco developer says "the numbers have changed quite materially" after documents emerged showing he and his family were investing just $10m, or less than 2 percent, of the required $718m.

Ra’anan ‘Ronnie’ Ben-Zur, the principal behind the Tyrsoz Family Holdings development, told Tribune Business "we have everything we need to proceed with the project" after it was revealed he had been trying to attract $50m in equity financing from other investors prior to the COVID-19 pandemic.

The details of Mr Ben-Zur's financing plans are contained in a document entitled "Project Oceanside", which was obtained and released by an environmental coalition opposed to his plans to develop a resort and marina project in a highly sensitive area close to the Abaco National Park.

Besides the initial equity, which was to total $60m with Mr Ben-Zur's $10m contribution to a "limited partnership" structure involving other investors, the remainder of Tyrsoz Family Holdings' project financing was to come from $250m structured as "a mezzanine loan/preferred equity" plus a further $408m "senior construction loan".

These facilities were to be drawn down two and three years, respectively, after Mr Ben-Zur "closed" on the project, which likely means from when he completes the purchase of two separate land parcels, collectively totalling around 1,100 acres, and obtains all the necessary government approvals necessary to proceed.

While acknowledging that "Project Oceanside" was a genuine document, the Tyrsoz Family Holdings chief said many of the details had changed - due to a combination of COVID-19 and capital markets reaction - since it was first conceived as a promotional tool to pitch to prospective investors.

He also refuted suggestions that the south Abaco development's success is heavily reliant on land speculation, after Tribune Business questioned whether the target of raising $250m from "pre-construction escrow sales" was ambitious to say the least.

Project Oceanside revealed that a further $500m worth of real estate and marina slip sales was the goal during the three-year construction period, taking to the total to $750m. Many observers will likely view this as unrealistic, but Mr Ben-Zur replied: "It's not what happened at Ginn sur mer."

Describing the Sustainable South Abaco group, which obtained and released the document, as "obsessed" with his financial capabilities, Mr Ben-Zur said he found this "a bit telling" as it suggested its environmental case against the project proceeding was "weak".

Conceding that "it sounds like a real document; I have no reason to believe otherwise" when pressed on its contents by this newspaper, the developer also confirmed that the basic financing structure involving a mix of equity, "preferred equity" and debt remains largely intact.

Mr Ben-Zur, though, asserted that the actual numbers had changed. He revealed that "there are other investors involved" in the project, hinting they are of the institutional variety, although he declined to name them citing confidentiality agreements.

The Tyrsoz Family Holdings chief added that the project had managed to attract investors both before COVID-19 took hold and afterwards, when he resumed his capital raising efforts in the summer, while "early sales" had also been achieved on the real estate side - despite the land transactions having yet to close - with "small deposits being placed into escrow".

"It's not exactly the same as you're seeing there," Mr Ben-Zur said of the financial details. "It was the plan at the time and things have changed. There were changes pre-pandemic because of capital market reaction, and changes after the pandemic.

"It's a puzzle, and we've raised interest from other people through various documents. The financial arrangement we have is a puzzle at various levels. There's different layers. It's a very complicated structure; not overly complicated, but it's not simple.

"Things have changed quite materially. The numbers have changed here and there quite materially. But the fact is we have the funds we need to move forward. We have everything we need in order to proceed with the project subject to getting the approvals, which we are confident we can get."

Tribune Business sources yesterday said Mr Ben-Zur's financing structure was not atypical for Bahamas-based resort and real estate developments, with Project Oceanside providing a good case study on the anatomy of such investments.

Project developers/owners, they suggested, typically invest sufficient equity (their own monies) in obtaining a Heads of Agreement from the Government, then leverage this deal - and the approvals/permits they receive - to attract other investors and financiers to fund the build-out.

Project Oceanside suggests Mr Ben-Zur may be doing similar. The document confirms he does not yet own the two land parcels, the 620-acre Lantern Head parcel and the 467-acre “South-West Point” tract, but rather has them "under contract" - effectively an option to buy - that he will execute once all the necessary environmental clearances are received from the Government.

However, the Tyrsoz Family Holdings booklet argues that the Heads of Agreement he signed with the Government pre-COVID-19, as well as tax breaks and concessions that include the ability to develop a small casino, have increased the value of these land-holdings four-fold from the $15m purchase price he has agreed to pay.

"Tyrsoz has the over 1,000 acres of Lantern Head and Southwest Point under contract for a consideration of $15m. Since this contract was executed two-and-a-half years ago the value of the land has increased substantially for the following reasons," the Project Oceanside document said.

"The approval of the Government of the Bahamas for the project has materially increased the value of the land. As part of the approval by the Government, the Government agreed to several concessions including the approval for a small casino... Overall, based on other projects reviewed, it is the opinion of Tyrsoz that a current appraisal may value the land at $60m or more."

Tyrsoz Family Holdings has made much of its pledge to grant 175 acres from its eventual landholdings to increase the Abaco National Park's footprint. However, Project Oceanside reveals the land swap with the Government is key to increasing its beach front land and therefore the value of its property.

"The most significant concession is the agreement to a land swap that adds only about 80 acres to the total area but increases the beach front land from a very small 700 feet to about 6,000 feet. The nine-fold increase is transformative to the value of the project and the land," the document said.

Rosewood Hotels, Jack Nicklaus and Yacht Club de Monaco are named as the project's resort, golf and marina partners respectively, but Mr Ben-Zur said this line-up is now much changed although he did not reveal any replacements.

The Tyrsoz Family Holdings project currently features 170 hotel rooms, 290 residential units, a 136-slip mega yacht marina, 18-hole golf course and other amenities. However, Project Oceanside said there is significant reliance on generating vast sums from real estate pre-sales.

"Based on preliminary assessments supported by reports from CBRE and IMI Worldwide Properties (a leading real estate broker in selling projects of this type), it is estimated that approximately $250m of sales will occur in the first two years prior to commencement of construction," Project Oceanside said..

"These sales will be achieved with a significant discount to current market price. During the three-year construction period, about $500m of sales will be achieved. The remaining units will be sold during the two years post-construction."

It is unclear whether these projections have changed as Mr Ben-Zur did not give any revised figures. When questioned as to how realistic these forecasts are, and if the project is reliant on land speculation, he vehemently denied the latter and said real estate and marina slip buyers are not financing the build-out or acting as the collateral for the debt funding.

"Let me make the distinction here; a big distinction," he replied. "We are not using buyers' money to fund the project. We are raising money from institutional investors who will be investing in the project based on the proven success of sales to a certain number. We are not using that money."

Mr Ben-Zur also rejected the notion of using sales revenues as loan collateral, as "those buyers are not ready to close on the deal" and want to see himself and the development team deliver. As a result, any monies received will be held in escrow until closing.

However, Project Oceanside states: "It is expected that $250m will be raised as a mezzanine loan/preferred equity to be collateralised by the $250m pre-construction escrow sales.

"Drawdown of this facility will commence just prior to construction, approximately two years after closing, and will be conditional on achieving the pre-construction escrow sales and the availability of the senior construction loan facility."

Mr Ben-Zur, meanwhile, argued that Sustainable South Abaco was focusing on his financial plans due to the weakness of its case. "I find the obsession of the environmental group in our financial ability to be a bit telling, as it indicates to me their environmental case is a bit weak," he told Tribune Business.

"Environmentally we are very confident we have a good case and they have a weak case. If we didn't have the money there wouldn't be a project. Why are they so concerned about it? We were never planning, and still don't plan, to start any work in earnest until we have our ducks in a row. I have no interest in owning 11,000 acres in south Abaco that has no use. Why do that?"