The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government “must” fix Grand Bahama’s Dorian devastated airport if it is to close the Grand Lucayan’s proposed $100m sale, a former director of the resort said yesterday.

Carey Leonard, the Callenders & Company attorney, told Tribune Business that any delays to closing Electra America Hospitality Group’s purchase were likely to be caused by the investor seeking assurances/guarantees from the Government that it will do whatever is necessary to fix Grand Bahama International Airport in the timeline required.

Suggesting that the purchase may take until end-2022 to close, he added that the Grand Lucayan’s fate - and that of Freeport as a tourism destination - “hinges” on what happens with the airport given that the two are inextricably linked when it comes to producing a world-class tourism product.

Freeport residents have become increasingly nervous at the absence of any noticeable progress on the Electra America purchase, especially since the 60-day due diligence period that was unveiled when the deal was announced expired earlier this month. After that date, the buyer’s deposit becomes non-refundable, although Julian Russell, the Grand Lucayan’s chair, said that period can be extended by 15 days to take it through to next week.

“There’s a lot of moving parts to this thing,” Mr Leonard told this newspaper. “I would hope they have something concrete by the end of the year. It would make sense if they take their time and get it done by the end of the year... I am sure these guys are saying to the Government: You must do the airport. We’re not going to get this deal done if the airport is not resolved. The airport is critical on so many different levels.

“If I were the potential purchaser of the hotel, I wouldn’t do it unless the airport is in the mix. They cannot ignore the private aviation, they cannot ignore the domestic, and they cannot ignore the international. There’s an awful lot of ground work that the Government has to do with regard to the airport before the hotel falls into place. If there’s any delay on the hotel it will be because of the airport.

“There’s a lot of moving parts that all have to be put together at the same time. It was never going to be a simple deal, and that’s why it’s taking time for them to get it resolved. The airport is an absolutely critical, critical part of the puzzle. I can certainly said the hotel is going to hinge on the airport. We must get the airport done. Any investor coming in, looking at Grand Bahama island, I’m sure is looking at the airport.”

Chester Cooper, deputy prime minister with responsibility for tourism, investments and aviation, said during his Budget presentation that three “credible” investors had expressed interest in redeveloping Grand Bahama International Airport via a public-private partnership (PPP) although he did not name them.

“I am pleased to advise that as a result of the RFP (Request for Proposal) process, we have three credible suitors for the redevelopment of a world-class Grand Bahama International Airport. They’re credible with a track record and their own money so we expect construction to be completed by January 2025,” he added.

Mr Leonard said his own research showed Electra America to be a credible purchaser for the resort, adding: “It appears as long as they can find the finance, these guys seem very capable of doing it. I’ve looked at what they do, and they seem to have a good understanding of the market. My only concern would be the money. I’m sure they’re going to need a big chunk of change to do what they want to do, but if they get it they’ll transform Grand Bahama and especially Port Lucaya.”

He pointed out, though, that Electra America’s financing - and the group’s ability to access it - may not wait around for ever if the hotel’s purchase completion gets delayed by issues involving the airport. Florida-headquartered Electra America Hospitality Group is effectively a joint venture between Electra America, a real estate developer, operator and financier, and AKA, which is billed as a luxury hotel residences specialist.

The group’s website says their partnership, boasting $6.85bn in assets under management, aims “to capitalise on disruption in the hotel industry” via a focus on acquiring, renovating and managing “well located hotel assets with upside potential in major US markets”. It currently includes two Florida properties, Hotel AKA Brickell in Miami, and Hotel AKA West Palm, in West Palm Beach, among its active portfolio, although the Grand Lucayan represents its first expansion outside the US and UK.

Mr Cooper said Electra America had agreed a Memorandum of Understanding (MoU) with the Government and was to pay a $5m deposit once a sales agreement is signed. That deposit becomes non-refundable after a 60-day due diligence period closes, with the $95m balance to be paid within 120 days of the MoU signing.

“The Government has committed to standard concessions under the Hotels Encouragement Act,” Mr Cooper added, although he gave no details. “Electra has committed to an estimated $300m renovation to rebuild the Grand Lucayan into an environmentally sustainable, luxury resort.”

Three resort properties were detailed. A four to five-star branded luxury lifestyle hotel, featuring 198 rooms and 24 villas and targeted at corporate and leisure business; a four-star convention hotel with 535 rooms, featuring an amphitheatre and convention centre; and a 257-room condo-hotel style family resort with suites that are double the size of the Grand Lucayan’s existing rooms.