The Tribune

• Courtyard by Marriott mortgage in default

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A DOWNTOWN Nassau resort that has defaulted on its debt is due to be sold to a major UK-based hotel group in a deal set to close on February 22, it was revealed yesterday.

Ryan Pinder, the attorney general, told the Senate that the Courtyard by Marriott Nassau resort located opposite Junkanoo Beach is set to be acquired by London Regional Hotels once the Government completes a land swap with the property’s existing owner.

Revealing that the sale’s closing has been repeatedly pushed back by the wait for the Government to clean-up title issues relating to the former Pearis Court ‘right of way’ that runs through the Courtyard by Marriott’s back parking lot and associated facilities, Mr Pinder said the resort’s present owner, Sunset Equities, is in arrears in servicing its debt financing facilities.

“Sunset Equities now owns the four parcels surrounding Pearis Court, and has an outstanding mortgage which is in default. The mortgage holder has agreed to sell the resort to London Regional Hotels, a UK-based hotel group. Closing date has continuously been pushed back until this matter is completed, and is now scheduled for February 22, 2022,” the attorney general confirmed.

Mr Pinder said the Government was justified in using the Acquisition of Land Act to acquire the ‘right of way’ because it was in the public interest for the hotel deal to proceed, and user in an upgraded property and fresh investment in the Bahamian tourism product.

“This acquisition is in support, and a condition, of the approved sale of the Marriott Hotel to new hoteliers,” the attorney general added, asserting that it will lead to “further foreign direct investment and development in our hospitality sector”.

Mr Pinder said the move would “ensure a hotel property on Junkanoo Beach has a viable future”, and “prevent a hotel in Nassau from falling into disrepair, non-use or even a complex legal battle”.

London Regional Hotels is the resort arm of a privately-owned group said to have amassed a $9bn global property portfolio, which includes owning hotels in Barbados, Turks & Caicos and the Cayman Islands as well as Florida. It has tie-ups with operating brand partners including Marriott, Nobu Hotels, Club Med and Melia.

The Acquisition of Land Act is only supposed to be used by the Government to purchase land when it is in the public interest to do so. Adrian White, the FNM’s St Anne’s MP and deputy leader candidate, last week queried in the House of the Assembly whether the Pearis Court swap met this legal criteria because the deal appeared to be for the benefit of a private hotel developer and not the public.

However, the impending Courtyard by Marriott sale was not mentioned during the House of Assembly debate on the ‘right of way’ land swap. A resolution from both houses of parliament is required to give effect to the transaction, and Senate approval was duly forthcoming yesterday.

In return for conveying the former ‘right of way’ to Sunset Equities, the Government will receive a “wayleave parcel” of land giving Bahamas Power & Light (BPL) access to a sub-station on the Courtyard by Marriott property as well as $10.

Pointing out that the transaction was initiated, and approved in principle, by the former Minnis administration, Mr Pinder said: “The reason for the acquisition is unfortunately not uncommon in The Bahamas: The lack of clear title.

“In research going back as far as 1894, Pearis Court was shown as a road reservation, and the Department of Physical Planning confirmed it as a public road but no specific owner of record could be located in the Registry of Records.

“Notwithstanding, the land being used as a public road, the Office of the Attorney General had concerns of title, namely whether the lands were vested in the Government and, if so, in which agency and by what means,” he added.

“Our office has been unsuccessful in confirming government’s ownership of Pearis Court. Consequently, it was advised that the best course of action would be for the Government to compulsorily acquire the property under the Act to ensure that Government had good and marketable title.”

Spelling out the consequences, Mr Pinder added: “This is a non-controversial acquisition because, as a public road, Pearis Court would have been owned in some form or fashion by the Crown or other government agency.

“The challenge is that you can only convey the interest that you have, and without identifying the proper title holder you cannot identify the proper party to the conveyance. We need to secure good title in Pearis Court in order to convey to the developer, which will ensure the continued viability of the Marriott Hotel and more investment in the country.”

Sunset Equities’ president/majority shareholder is Yaron (Ron) Hershco, a New York-based developer, based on this newspaper’s records. The Courtyard by Marriott’s soon-to-be ex-owner has been engaged in a long-running legal battle with its former financier, Bahamas-based Sterling Asset Management, which is headed by its chairman and chief executive, David Kosoy.

That litigation is understood to still be ongoing, but it is unclear whether that will be impacted by the impending sale. Mr Kosoy did not respond to Tribune Business inquiries seeking comment before press time last night.

Sterling provided the initial $12.5m financing to Sunset Equities to enable it to acquire and overhaul the then-Nassau Palm Resort, subsequently turning the West Bay Street property into the Courtyard by Marriott.

Although Sterling was later replaced by a new financier, which now holds a defaulted mortgage, Justice Ian Winder previously revealed that the Bahamian lender’s dispute with Sunset Equities had sparked some four legal actions.

The first saw Sunset Equities obtain a Supreme Court injunction to prevent Sterling and Mr Kosoy obtaining a receiver for the Courtyard by Marriott Nassau, with the two sides later agreeing - via a Consent Order - a mechanism whereby the sums owed to the lender were duly paid.

However, Sterling subsequently filed a separate action against Sunset Equities, Mr Herscho and Parris Jordan, another of the resort owner’s shareholders, alleging they had breached the contract contained in a July 5, 2016, commitment letter.

With that dispute unresolved, Justice Winder added that a third action involved Sterling’s April 6, 2017, petition to have Sunset Equities wound-up on the basis of insolvency.

And a fourth lawsuit launched by Sunset Equities on March 5, 2020, sought damages against Sterling and Mr Kosoy for “malicious presentation of a winding-up petition” and “conspiracy to injure by unlawful means”.