A private equity group plans to invest $8 million in upgrading the Nassau Palm Resort after completing the downtown Nassau property’s acquisition on Friday.
Sunset Equities, a consortium of Caribbean and international investors, pledged in a statement that it would hire Bahamian contractors, and local labour, to work on renovations that are set to start in three months and be complete by November 2014.
Renovation work on the 183-room Nassau Palm, which has been for sale for three years, is projected to create 75 construction jobs, plus around 70 permanent posts once the hotel reopens.
The ownership change/upgrade is perfectly timed, as it will dovetail nicely with plans to revitalise Bay Street and downtown Nassau, plus the potential acquisition just down the road at the British Colonial Hilton.
Tribune Business exclusively revealed the Sunset Equities deal last month, and the fact it was set to close by end-May.
The West Bay Street property, located opposite downtown Nassau’s popular Junkanoo Beach, has been on the market since late 2010, but two previous sales fell through. One of those deals involved an offer by a Bahamian group.
Valentine Grimes, the Bahamian attorney for the vendor, Genwood Ltd, told this newspaper at the time: “The purchasers are known to the Bahamian Government. They come very highly recommended. It’s a non-Bahamian group, and they come with a good reputation.
“In recent months there have been four or five groups, and in fact we had it under contract previously with a Bahamian group. That, for various reasons, did not complete.
“After that contract fell through, we again put it on the market and entered into another contract with a non-Bahamian group.”
Tribune Business understands that the Nassau Palm’s owner has actively been seeking to sell the resort since late 2010. Prior to the Bahamian group’s emergence, a deal with another overseas buyer also fell through, making the Sunset Equities deal the third it had entered into.
Tribune Business sources suggested the purchase price was less than the $6.8 million paid by Warwick International Hotels & Resorts to acquire the 250-room Paradise Island Harbour Resort in December 2012.
Mr Grimes acted for the vendor in that deal, too, and Tribune Business understands that the shareholders in Genwood Ltd, the Nassau Palm’s holding company, are Driftwood Hospitality and the Miami-based Gencom Group. The resort was financed by the private equity arm of Lehman Brothers, the bankrupt investment bank.
In the weekend statement, Mr Grimes also confirmed Tribune Business’s previous revelation that the Nassau Palm’s new owner is set to brand the resort under a major international flag - thought likely to be something like the Marriott.
Mr Grimes said: “The completion of this transaction is a good indicator of the high level of investor confidence in the Bahamas, its government and its people.
“The plans that the new investors have for the property, in particular to brand it, will significantly assist in the continued redevelopment of the downtown Nassau area.”
Mr Grimes confirmed that as part of the transaction, all the Nassau Palm’s former employees - numbering less than 100 - received a severance pay and their salaries, totalling around $400,000, the same day as the sale.
Sunset Equities said it plans to provide hospitality and customer service training across all departments, including executive level positions. Bahamian law firm Lennox Paton provided legal advice to it on the transaction.
The statement described Sunset Equities as a group focused on acquiring hotels throughout the Caribbean region, making the tourism model more sustainable and maintaining environmentally-sound decisions. It is looking for other acquisition opportunities beyond the Nassau Palm Resort.
The Nassau-based Sterling Financial Group (SFGI ), headed by David Kosoy, provided the Nassau Palm acquisition financing through one of its
managed mortgage funds, the New Providence Income Fund. It provided financial advisory services to Sunset Equities Ltd.
Khaalis Rolle, minister of state for investments, said: “I am very excited about the purchase by this group, which has tremendous capacity and the experience needed to revitalise the entire downtown strip with a well-known US branded hotel.
“The property has been sitting for a very long time, so this transaction will offer significant benefits, and play a major role in creating an invaluable experience for our local and tourist market.
“We supported this group because of their ability to expand the tourism product beyond this one acquisition, with major international partners, and anticipate a growing partnership that will create diverse, sustainable opportunities for the Bahamas and Bahamians.”