The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has rejected a bid to acquire the former Ginn sur mer project, which planned to construct a 28-storey “iconic tower” modelled on Alexandria’s ancient lighthouse, in its present form.

Highly-placed sources, speaking on condition of anonymity because they were not authorised to talk publicly, told Tribune Business that the Davis administration had formally notified Kingwood International Resorts and its principals late last month that it was not currently prepared to approve their acquisition of the Grand Bahama-based project or give the existing development plans the go-ahead.

Chester Cooper, deputy prime minister and minister of tourism, investments and aviation, declined to comment when approached by Tribune Business last week. Gail Lockhart-Charles, the Bahamian attorney representing Kingwood, also refused to speak to this newspaper, neither confirming or denying whether the Government had turned down her client’s proposal.

However, Tribune Business was told by multiple contacts that the Government had become concerned that Kingwood was marketing the former Ginn project, which it has rebranded as Reunion Cay, as if it was a done deal both online and at events earlier this year such as the Fort Lauderdale International Boat Show - giving the impression that it owned the near-2,000 acre site already even though none of the necessary approvals have been granted.

Kingwood has gone to the extent of setting up a dedicated website for the project, www.reunioncay.com, along with Facebook and Instagram pages. The Facebook page was promoting Grand Bahama’s West End as recently as yesterday and over the weekend, touting its “founders programme”, which is a tool commonly used by developers to entice high net worth individuals to be the first persons to buy real estate in a new project.

The Reunion Cay Facebook page spoke of “a limited investment opportunity that secures the first right to property selection” in relation to its Founders programme. It is unclear why the Government turned down Kingwood’s purchase, and its initial development plans, but the latest marketing activity suggests the developer may not have given up on its West End ambitions and that its plans may come back in a revised format.

However, Tribune Business was told that the Government’s stance may pave the way for other potential buyers to emerge, with several said to have been waiting for the verdict on Kingwood’s bid before making their move. Jeff Woolson, of the US-based CBRE real estate firm, who is leading efforts to secure a purchaser for the former Ginn sur mer project, did not respond to this newspaper’s phone calls and messages seeking comment before press time.

One source, though, said of Kingwood’s activities: “They are out there, promoting sales of the property. How can you be doing this and haven’t closed? The history of this West End property has been one of a complete mess up. If there’s a case study of what we have to avoid, this is it. 

“You have an asset there that requires a lot of maintenance and that is just not happening. The infrastructure, that is just sitting there, and hurricanes sure don’t help. A lot of people are afraid of West End. The bottom line is we need to get it sorted out. We need it to happen.”

Tribune Business reported last December that Kingwood International Resorts, which owns two properties in Florida and another two in Georgia, was working to raise the necessary financing after signing a sales agreement for Ginn sur mer’s purchase and paying the deposit customary in all real estate-based transactions.

Details were revealed in a letter sent out to condominium owners at the Old Bahama Bay resort, which would have been involved in - and impacted by - a successful Kingwood acquisition of the former Ginn project components held now held by Lubert Adler, the Philadelphia-based investment bank that was its financing partner and provided West End’s seed capital.

Confirming that Kingwood has Lubert Adler’s West End assets “under contract”, and was hoping to complete the purchase in “the first part of 2022” once its due diligence was completed, representatives of the condo owners referred to two meetings with the potential buyer and its executives.

“On June 17, members of the IVRC board met with representatives of Kingwood International Resorts and their principal, Farbod ‘Fred’ Zohouri, at Kingwood’s recently acquired Reunion Resort in the Orlando/Kissimmee area,” the update said.

“Kingwood and LRA-OBB (Lubert-Adler-Old Bahama Bay) advised that Kingwood had the Lubert Adler West End property under contract, and were in the process of their due diligence review of the site. Recall that LRA-OBB owns the common areas around the Old Bahama Bay condominiums, the pool, beach, marina, shops, restaurants undeveloped golf course, and much of the property previously owned by the Ginn company.

“Kingwood has plans for a large casino, resort hotel, mega yacht marina, golf course and for-sale residential products on the Lubert Adler property. The name of their planned resort is Reunion Cay...... Due diligence review by Kingwood is still underway and their stated goal is to have a closing with Lubert Adler the first part of 2022.”

IVRC stands for Island Ventures Resort and Club (IVRC), the entity formed by Old Bahama Bay’s 73 condo owners to keep the Grand Bahama resort open following Ginn’s 2011 default. It has been operating Old Bahama Bay’s marina, retail and restaurant facilities, and other amenities, under the terms of a June 2012 lease with Lubert Adler.

Attached to the letter were plans for the tower, to be called The Lighthouse, which was to stand almost 400 feet high and feature “a five-star luxury hotel” with 102 rooms; 40 two-bedroom condominiums and penthouse suites on the top four floors, according to Kingwood documents.

The Ginn sur mer project, and West End in general, have been at a standstill for more than a decade since the original developer, Bobby Ginn and his Ginn Clubs & Resorts, defaulted on their project financing in 2011 in the wake of the 2008-2009 recession.

Efforts to find a new developer have resulted in several misses. Skyline Investments, a Toronto-based real estate investor/developer listed on the Israeli stock exchange, with $500m in assets and a focus on hotel and resort development, broke cover to unveil its plans for the 2,012-acre property in the early years of the Minnis administration although no deal ever ultimately materialised.

Tribune Business sources previously suggested that resolving West End’s fate has the added complication of dealing with two vendors. What would have been the core project is owned by Lubert-Adler, which holds 280 acres that were earmarked as the site for the hotels and casino. Its landholdings also include key amenities such as the airport, marina and utilities.

Kingwood acquired Ginn’s former Reunion property in Orlando from Lubert Adler, which gave the latter confidence it may be able to take West End off its hands, too. But a Credit Suisse-led lending syndicate took possession of the remaining 1,476 acres at the former Ginn sur mer project after Ginn Development Company defaulted on its $276m loan.

It effectively inherited the real estate component of the Ginn project, and hired Replay Resorts to master plan that property. Lubert Adler and Credit Suisse have, though, worked together in the belief this is the best way to maximise their exit price - and potential recovery - by selling the former Ginn sur mer as one. It is unclear, though, if Kingwood was to acquire both pieces.

Hundreds of millions of dollars were invested in developing West End’s infrastructure prior to Ginn’s collapse, so any purchaser will inherit a foundation on which to build. Tribune Business understood this amounted to $200m in infrastructure spend, but was told by a source familiar with the project that the actual spend was closer to $523m.

They added that the former Ginn project’s core, featuring amenities such as the casino and marina, has to be developed all at once rather than in phases - something that will cost at least $200m-plus. And they suggested that “the money in that project” is to be made from the marina, which has the ability - at full build-out - to host up to 35 350-400 foot mega yachts at any one time.