By NATARIO McKENZIE
Tribune Business Reporter
BROOKFIELD Hospitality said yesterday that the Atlantis resort was “well positioned for future growth” under its management, noting that the value of the resort is significantly in excess of its debts as evidenced by its $195m equity investment last month.
The comments come following Wall Street credit ratings agency Standard & Poor’s (S&P) projection that the “long term sustainable value” of the property was over 50 per cent less than the value quoted by appraisers.
While not commenting on the S&P’s analysis of the resort property, Andrew Willis, senior vice-president of of communications and media for Brookfield, said iyesterday in response to Tribune Business enquiries: “Atlantis is a unique world class resort and well position for future growth under the management of Brookfield Hospitality. We believe that the value of Atlantis is significantly in excess of its debt, as demonstrated by the $195m equity investment that Brookfield made in the resort in July, 2014.”
The $1.9 billion recapitalisation saw Brookfield and its institutional investor partners make a further $195m equity investment in the resort. Some $1.75 billion in debt financing is now secured on Atlantis and associated Paradise Island real estate holdings, via a seven-year fixed rate credit facility raised from a consortium of banks, pension funds and investment funds.
When Brookfield took over the property prior to the 2012 election through the ‘debt-for-equity’ swap worked out between itself and the other lenders on one side, and Kerzner International on the other, around $2.2 billion worth of debt was secured on Atlantis and the One & Only Ocean Club. The refinancing has thus effectively reduced Atlantis’s debt load by $400m-$500m, lowering debt servicing (interest) costs and likely freeing up capital/cash flow for further investment and amenity upgrades.
S&P has projected that Atlantis will experience “significant competition” from Baha Mar, which would result in cash flows significantly below that which have been projected by Atlantis itself and an appraiser brought in as part of the refinancing effort. S&P said that its long-term sustainable value estimate for the resort is 54.4 per cent lower than the appraiser’s valuation.