It has been reported that lenders were hesitant to refinance Kerzner International’s $2.3 billion loan because they were not sure that the resort could remain successful alongside the Baha Mar development.
Members of the Ingraham administration allegedly believe that lenders might have refinanced the loan if it were not for Baha Mar, which they feel can not be successful without having a marketable theme.
Last November, Kerzner International Chairman and CEO Sir Sol Kerzner announced that his company was transferring ownership of the Atlantis Resort and the One&Only Ocean Club on Paradise Island to Canadian real estate conglomerate Brookfield Asset Management. The arrangement saved the Kerzner properties from going into receivership.
Brookfield is a global asset manager with approximately $150 billion in assets but no experience in the hotel industry.
The terms of the agreement have not been fully disclosed, although the PLP have demanded that the government release the agreement to the public.
The Baha Mar development is supposed to be completed by 2014 and proponents believe it will revitalize the economy of the Bahamas by injecting considerable revenue into the country over the next three years.
Critics feel that the new development will result in a glut of hotel rooms in Nassau, and that huge casino developments in Florida may moot the benefits of building another casino in the Bahamas.
Atlantis’ new owners have sought a stamp tax reduction from the government. The Ingraham administration, which originally did not think that Brookfield was a good fit for the Bahamas, is said to be considering the request.
Kerzner International was retained to manage the Paradise Island properties but the four-year management agreement can be terminated at any time if Brookfield brings on a new partner who wishes to change the company’s direction, or if Kerzner does not meet growth benchmarks, which are set high.
Meanwhile, Brookfield has agreed to continue with new investments of around $50 million per year while maintaining the current employment levels and continuing to assist in the marketing of The Bahamas brand at existing levels.
