The Tribune

* Says: 'We're not selling this like Fried Fish'

* Near-$120m real estate sales to fund build-out

* Argues that projections 'very conservative'

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Sir Franklyn Wilson is defending as "very conservative" projections that the Jack's Bay project will hit up to $48.9m in annual real estate sales by 2023, adding: "We're not selling this like Fried Fish."

The Eleuthera mixed-use resort community's chairman voiced confidence it will shrug off the COVID-19 pandemic and strike its targets because it is seeking "price points lower than what exists" at rival developments such as Albany and Baker's Bay.

Speaking out after Tribune Business obtained forecasts showing Jack's Bay is targeting some $119.652m in real estate sales over its next three financial years to 2023, Sir Franklyn said this would largely be generated from "seven-figure" purchases by the 40 so-called "founder" investors the project is seeking to give it critical mass.

The forecasts, which were contained in the offering documents for the project's ongoing $10m preference share offering, further reveal that securing these 40 investors is critical to Jack's Bay build-out - and the pace at which this is achieved - since their real estate purchases will finance infrastructure expansion.

Jack's Bay and its principals, who also include Tommy Turnquest as deputy chairman, are predicting a rapid post-COVID-19 rebound with real estate sales totalling $32.886m in the project's 2020-2021 financial year. This, they project, will be followed by annual sales of $37.87m and $48.897m in 2021-2022 and 2022-2023, respectively.

The cash flow projections make clear the sales proceeds will be employed to finance $57.4m worth of buildings and infrastructure construction over that three-year period, ranging from a low of $11.9m in 2020-2021 to $23.3m in 2022-2023.

Challenged by this newspaper as to whether these forecasts were to ambitious and aggressive, especially when set against the COVID-19 pandemic's backdrop, Sir Franklyn responded: "We're looking for 40 founders. We're not selling lots for $100,000. The founders are buying real estate to become a founder; it's a seven-figure sum.

"COVID-19 is a matter of great question, but the fact of the matter is we think these are very conservative assumptions. The reasons are the following: Our price points are very modest compared to other properties in our market segment.

"We're selling for a relatively modest amount compared to what they're selling for, and we're only looking for 40 sales. We think the numbers are very conservative." Sir Franklyn also argued that there was "no comparison" between Jack's Bay and mixed-use resort rivals due to the location's natural attractions, which included beaches, "lagoons and blue holes".

"For us, our key is to get the market to understand the product," he added. "That's why we are not trying to sell this like Fried Fish. The whole point is to properly position this in the marketplace. There is nothing like this in the market.

"People come to The Bahamas for ocean-oriented purposes. Jack's Bay is ten minutes from Davis Harbour. The best fishing grounds in The Bahamas are ten minutes away from Davis Harbour. Our projections reflect price points lower than what exists in our market segment. We're only trying to get 40 sales."

Conceding that Jack's Bay had delayed marketing promotions targeted at finding these 40 "founders" until COVID-19 eased, and global travel resumed, Sir Franklyn said: "We want people to come and be confident. We're taking our time, taking it easy, and going to the market when the time is right. There is nothing like this in The Bahamas.

"The other reason this will really be special is that people in this market segment ought to anticipate authenticity. The leadership of our company differentiates us from any other property in this market segment.

"We know The Bahamas, we know what is authentic in The Bahamas. We're in position to make sure people get an authentic Bahamian experience. We'll compete with anybody between nature and authenticity."

SIr Franklyn added that the involvement of world-renowned golfer, Tiger Woods, and his company in designing the golf course "gives us another competitive advantage. These are discernible competitive advantages that take us to the point where we think our numbers are conservative".

The "authenticity" statement is based on the large number of Bahamian shareholders in Jack's Bay's immediate holding company, Eleuthera Properties. While While Sir Franklyn's Sunshine Holdings group is the largest shareholder, its other investors include the likes of Colina, BAF Financial, the John Bull Group of Companies and Royal Bank of Canada (RBC).

Besides the corporate investors, the Anglican Church has been “gifted” shares in Eleuthera Properties Ltd, while the estates of the late John Morley and Billy Lowe were also among the shareholders.

Eleuthera links to the investors are through the estates of the late Albert Sands and Whitfield Kemp. Another Eleuthera shareholder is businessman Lawrence Griffin from Governor’s Harbour, while Sir Orville Turnquest, the former governor-general, and his family - long-time investment and business partners of Sir Franklyn - are also invested.

And Jack's Bay preference share offering has received backing from Julian Brown, president and chief executive of BISX-listed Benchmark (Bahamas), who has pledged to invest in it and recommend the same to clients.

The projections obtained by Tribune Business show the "founder" real estate sales generating up to $27.059m in net cash flow by 2022-2023, once recurring expenses and infrastructure works costs are deducted. By the end of that financial year, Jack's Bay is forecast to have some $61.908m in accumulated cash.

However, the project is only projected to be net cash positive from operations by 2022-2023, when it finishes some $362,102 in 'the black'. In the prior two years it is forecasting negative "net cash" of $422,355 and $372,958, with the revenue from memberships, golf operations and food and beverage exceeded by expenses.

The "founder" strategy is one typically employed by new-build private members' clubs and mixed-use resort communities to attract high net worth owners to invest in buying/constructing residences, thereby providing them with the critical mass and credibility to grow and gain further homeowners.

Albany, the high-end south-west New Providence community, whose investors include Bahamas-based billionaire Joe Lewis and his Tavistock Group, which led the development of similar projects in Florida such as Lake Nona and Isleworth, as well as world-famous golfers Ernie Els and Mr Woods.

Albany's managing partner told this newspaper at the time that the project knew the identity of its founders before any construction activity started. And Baker's Bay, the Abaco-based mixed-use resort and residential community that Jack's Bay is also modelling itself on, enjoyed significant success in selling real estate prior to Hurricane Dorian. Baker's Bay, principal investor, Discovery Land Company, has also developed similar communities in the US and Mexico.