The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Albany’s partner in its joint venture offer to acquire the adjacent South Ocean property is a major New York-based asset manager, Tribune Business can reveal, with a decision on the preferred bidder set to be made next Tuesday.

Tribune Business sources close to developments have confirmed that Albany’s developers have teamed up with Och-Ziff, the hedge fund and asset manager with over $40 billion in worldwide assets, to bid on the 383-acre property that has been closed for over a decade.

Christopher Anand, Albany’s managing partner, had previously told Tribune Business that the developer had partnered on a bid to acquire South Ocean, although he declined to identify them.

“We have submitted an offer. It’s a partnership with somebody,” he said.

Och-Ziff’s real estate funds have shown recent interest in Bahamian hotel and resort investments, having made a failed $73 million bid to buy downtown Nassau’s British Colonial Hilton resort in partnership with Roger Stein - the man who had previously attempted an $860 million redevelopment of South Ocean.

That ultimately failed when Mr Stein became bogged down in an acrimonious legal battle with his financing partner, hedge fund Plainfield Asset Management, which he ultimately lost.

It is unclear whether Mr Stein is playing a role in the Albany/Och-Ziff bid, although several sources suggested he would likely be in the background if he was, given that his failed development plans upset South Ocean’s owner, the Canadian Commercial Workers Industry Pension Plan (CCWIPP).

CCWIPP’s Board is due to meet next Tuesday, March 18, to assess the South Ocean offers and decide upon a preferred bidder, Tribune Business having previously revealed there were four serious bids received.

One is from the Albany/Och-Ziff group, while another has come from Argent Ventures, a private New York-based real estate developer, some of whose principals were involved in the $8-$12 million purchase and renovation of West Bay Street’s Nassau Palm property.

Argent also has considerable means, owning the land under New York’s Grand Central Terminal. The company also owns the Capitol Records Tower in Hollywood, California, and Miami’s Omni International Mall.

Multiple Tribune Business sources suggested that Argent had submitted an all-cash offer of around $60 million for South Ocean, and may have been asked to increase this by CCWIPP’s representatives yesterday. Gavin Christie, of the C A Christie real estate firm, is acting as broker for Argent in the deal.

The Albany/Och-Ziff group, thought to be Argent’s main rival although two other bidders are in the mix, is understood to have submitted a lower $40 million offer, but with the promise that the Canadian pension fund can retain some equity ownership and benefit from future profits and upside.

“Argent was the only one to come in with an all-cash offer, whereas the others were highly conditional and the fund would have to wait several years to get all its money,” one source said.

“They’ve [Albany/Och-Ziff] offered a carried interest in the place, where the fund would get a percentage of the future profits. The pension fund would keep a partial interest in it.”

Another source added that Argent had submitted “a more attractive cash bid, and Albany bid a bit lower, but they had some type of carrying interest”.

CCWIPP will therefore have to decide between getting all its money upfront, or remaining in South Ocean as a minority partner with the potential of extracting greater returns from the future upside.

Both Albany and Argent will be in good standing with the Christie administration due to their existing Bahamian investments, likely making government approvals of their bids a formality. Albany is probably in better stead, given that its investment is larger and has already created jobs.

It is understood that Och-Ziff would provide the financing, while Albany’s developers will offer management, operational and development expertise.

And as the next door neighbour, Albany may give South Ocean its first - and best chance - of succeeding since it was built in the late 1960s.

Not only do Albany and its developers have a strong track record of success, the development helped keep the Bahamas’ ‘head above water’ during the recent recession.

Albany has unquestionably had a positive economic and employment impact for the Bahamas, and its shareholders/investors have incredibly deep equity pockets. Apart from the Tavistock Group, the investment vehicle for Lyford Cay billionaire Joe Lewis, the other investors include world-famous golfers Ernie Els and Tiger Woods.

From almost every angle, Albany and its investors ‘tick each box’ in the Government’s investment ‘wish list’, and would likely be able to move much faster in developing South Ocean than any rival bidder.

Albany and its partner(s) are understood to have a “hybrid” development model in mind for South Ocean that is not necessarily reliant on securing New Providence’s third and final casino gaming licence..

While the Tavistock Group has gaming experience from the UK, it and its partners are thought likely to hold-off on any casino development at South Ocean until after Baha Mar’s opening, when they can better gauge whether the Bahamian market can support three casinos.

This, though, may open up an opportunity for others - notably Tennyson Wells’ proposed multi-million dollar investment project at Coral Harbour - which is reliant on getting that third casino gaming licence.

Albany’s existence also provides South Ocean with adjacent ‘critical mass’, something it can leverage off. It is also not surprising that Albany has taken an interest in what happens ‘next door’, as it will have a vested interest in ensuring any development matches its ambitions to create the “Monte Carlo or Monaco of the Caribbean”.

Another South Ocean bidder may include the former US Ambassador to the Bahamas, Ned Siegel.