The Tribune

• Property Fund buying 3.5 acre site near Gladstone Rd

• Investing $400k on short-term rental 'trial' downtown

• Targeting 15% rate of return minimum on ventures

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A BISX-listed real estate fund yesterday revealed it plans to invest up to $9m in developing its first New Providence warehouse and storage facility as it "gets back into expansion" again.

Michael Anderson, president of RF Merchant Bank & Trust, which acts as the Bahamas Property Fund's administrator, told Tribune Business it typically looks for a minimum 15 percent rate of return on such ventures after identifying a site near the Gladstone Road and Carmichael Road to make its entrance into this market.

The 3.5 acre site, which is vacant, was in the process of being acquired by the Bahamas Property Fund in a $1.403m deal according to its just-published 2022 financial statements, which disclosed the transaction. The sales agreement was signed on February 15 this year, with a deposit equivalent to 10 percent of the purchase price already paid, and the RF Merchant Bank & Trust chief said the fund is now working with an architect to design the site and obtain permits.

"At the moment we're actually trying to decide how best to develop that property for the purposes of providing warehousing and a storage facility," Mr Anderson told this newspaper. "We have approved the project at Board level to construct a warehouse and storage facility, and we're working with an architect to come up with an overall development plan and how we want to do it before we contract people to construct it.

"The architect will also help us to get planning permission to develop the site. It's located just east of Gladstone Road on Carmichael Road; just east of that junction. We will be investing $8m-$9n, and expect to move forward with it within the next month or two. We expect to try and move forward in the second half of this year and have it completed by the end of 2024."

This will be the Bahamas Property Fund's first warehouse and storage investment, and its first diversification beyond the high-end downtown Nassau and Paradise Island office space it has traditionally focused on. "We believe this is a market that is still under-served despite all the warehouses out there," Mr Anderson explained. "They seem to be full, and constantly full.

"The warehouses that are on the market already are generally full in most of these areas, and as development takes place along Carmichael and Gladstone Roads there will be more requirements for more warehousing so we want to come into a market where there is significant demand. We see the warehouse business expanding as the country develops.

"It's sizeable opportunity for the Property Fund to take advantage of as it's our first project. We'll look to use it as a starting position for ourselves, get it to work as intended and see what other opportunities present themselves. We believe it's the start of a much bigger business. At the moment, we just want to make sure we do it properly."

While the Gladstone Road/Carmichael Road warehouse project will likely only create four to five jobs once completed, Mr Anderson said RF Merchant Bank & Trust had spent the past year building up the Property Fund's management capacity so that it is able to take on more projects and expand the real estate investment trust (REIT).

He added that another initiative approved by the Property Fund's Board is the carving out of some 2,500 square feet of space, at its 100,000 square foot Bahamas Financial Centre flagship property in downtown Nassau, to target the short-term rental market following the COVID-induced changes to working patterns.

"The idea is to make that space available to businessmen and attorneys working downtown who need space on a short-term basis," Mr Anderson explained. "We believe the market is there. We've seen other short-term rentals used by businesses downtown and around Nassau, so there seems to be demand for that space after COVID.

"People don't want to work from long-term rentals. They want to work from both offices and home. It's a new model coming up from the change in the way we work. We're going to try it with a relatively small amount of space and see if we can find the right recipe and solution for people in that area."

If the Property Fund gets it right, Mr Anderson said it would seek to take its short-term rentals to other locations, including its One Marina Drive property on Paradise Island where occupancy is still languishing around 30 percent. "It's possible we will do something similar with the warehouse project at Carmichael and Gladstone if we find the right solution and way to make it work," he told Tribune Business.

"It will still involve us investing $400,000 to fit out the space [at the Financial Centre] to do it. It's not like there's no cost here. To some extent there's vacant space there, and we can use it as a trial." Together with the warehouse and storage facility drive, Mr Anderson said the Property Fund is also eyeing retail and short-term residential possibilities as well as business rentals as it gets back into expansion mode after a long hiatus.

"The Property Fund is finally getting back to looking at how it expands its lines of business," he added, "as well as acquiring other buildings to get back into growth. This is the start of that expansion. These are two new projects. The idea is to potentially expand on both of those, depending on how successful they are, and to get back into acquiring other buildings; potentially retail and short-term residential space.

"Through this process the idea is to diversify revenue streams of the Property Fund and create more opportunities to generate revenue. It's been a long time coming, but we're kind of excited about the opportunity and the opportunity is now there."