By NEIL HARTNELL
Tribune Business Editor
BISX-listed AML Foods yesterday unveiled a joint venture to bring its Solomon’s concept to southeastern New Providence and become “the address in the east”.
The joint venture with an affiliate of Sunshine Holdings, the conglomerate headed by Franklyn Wilson, will see Solomon’s become the anchor tenant in a shopping complex located between St Andrew’s School and Treasure Cove on the south side of Yamacraw Hill Road.
AML Foods will have a 45 per cent stake in the joint venture, for which a letter of intent has been signed.
Groundbreaking for the shopping complex’s construction is set to occur in the 2016 first quarter, with the Solomon’s store forecast to create between 65 to 75 new jobs when it opens near 2017 year-end. A further 20 indirect jobs are also projected.
Gavin Watchorn, AML Foods president and chief executive, told Tribune Business that ownership of its own real estate was “very much a change in strategy” for the food retail and franchise group.
Explaining that the BISX-listed firm now possessed the capital to invest in property, Mr Watchorn explained that the joint venture was “a further plank” in its objective of creating shareholder value.
He added that the agreement also enabled AML Foods for the first time to enter eastern New Providence, an area where customers had been clamouring for it to establish a physical presence.
“We feel we can open up a new area for the company with minimal cannibalisation of our existing sales,” Mr Watchorn told Tribune Business. “It’s an area of growth for us.
“We’re quite excited about it for a couple of reasons. First, getting into eastern New Providence, because the customers have been asking us about it for some time.
“And the joint venture was quite attractive for us because it provides you with greater security over your future, as you have an ownership stake in the building as opposed to just renting.”
Mr Watchorn, who revealed the deal to shareholders at last night’s AML Foods annual general meeting (AGM), said the joint venture would boost investor value by providing two different income streams.
Apart from the profits generated by the Solomon’s store and its operations, AML Foods will also share in the rental income generated by other retail tenants at the shopping complex through its 45 per cent ownership of the real estate.
“It’s very much a change in strategy for us,” Mr Watchorn conceded. “Previously, we didn’t have the capital to invest in our real estate. Now, we do.
“It’s a further plank in our long-term strategy of creating shareholder value.”
AML Foods had $4.932 million in cash and at the bank at end-April 2015, a 67 per cent increase on the $2.947 million it possessed just three months before - meaning it has sufficient liquidity to invest.
The arrival of its Solomon’s format in southeastern New Providence, anticipated for the final quarter of 2017, will shake-up a retail market which, in that area, has been dominated by Rupert Roberts’ Super Value and Quality Supermarkets formats.
Those chains have outlets at Winton and the Prince Charles Shopping Centre, and Solomon’s presence will both intensify competition and impact other retailers in the area, such as the Budget store in Elizabeth Estates.
Solomon’s location will enable it to target residents in upscale communities such as Treasure Cove, Palm Cay and Port New Providence, plus areas such as Winton , Eastern Road and the middle class communities in eastern New Providence.
A director of Luxury Homes (Bahamas), the Sunshine Holdings affiliate that is AML Foods joint venture partner, last night suggested the project could help “rebalance” New Providence by reversing, or at least stemming, the population drift to the island’s western end.
The director, speaking on condition of anonymity because they were not allowed to speak to the media, said the joint venture shopping centre was the first step in developing the full 105 acres owned by Luxury Homes.
They explained that 100 acres would be left for potential residential development, focusing on high-end and middle class homes, while there was also potential for “an office component” too.
“Luxury Homes owns a total of about 105 acres, and the plan calls for that eventually to be the address in the east,” the director told Tribune Business.
“The 105 acres is being divided into the commercial part, which is now subject to the joint venture, and we’ve left out about 100 acres for residential development.
“We have some exciting plans for it. We’re not rushing it. At this point in time, the story is AML Foods.”
The Luxury Homes (Bahamas) director added that research suggested the southeastern New Providence market was “significantly underserved from a retail perspective.
“It’s going to be a shopping complex,” they told Tribune Business, “and there may be an office complex.
“The phone is beginning to ring with regard to persons who could be interested in an office component out there. As circumstances change, there could be quite a case for an office complex there, like outside the gate at Lyford Cay.
“There’s potential for an office complex, and there are a lot of retailers we think would be willing to be in that area adjacent to Solomon’s.”
An office complex at that site would be attractive to companies, and their staff, who live in southeastern New Providence and do not want to commute to downtown Nassau.
“The whole complex can help to rebalance the island,” the Luxury Homes (Bahamas) director told Tribune Business. “The whole 105 acres is zoned R5 under the Planning and Subdivisions Act, which means it has the capacity for mixed use and whatever the market can support.
“This is going to be an opportunity for people who want to live in the east. We’re concentrating on the commercial for now. We think that will help make the residential piece even more attractive.”
They added that many persons had headed to western New Providence in a bid to escape the crime threat, and because there were no available properties in eastern gated communities. Yet this meant sacrificing some ‘quality of life’ aspects, such as proximity and access to the sea.
Luxury Homes (Bahamas) is 81 per cent owned by Sunshine Holdings, with the remaining 19 per cent equity held by another of the latter’s affiliates, the general insurer, RoyalStar Assurance.
Mr Watchorn, in a statement, said the new store was part of a previously-flagged strategy to open neighbourhood stores that complement its existing destination stores.
The agreement with Luxury Homes (Bahamas) is to be formalised, and completed, within 90 days.