0

Brea President: Post Office Lease ‘Good Deal’

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Bahamas Real Estate Association’s (BREA) president says moving the Post Office to the Town Centre Mall was the best option given the location and rental rate that was obtained.

Christine Wallace Whitfield told Tribune Business that if it were not for the politics there would be no concerns about the Post Office moving to the Town Centre Mall given the lease terms that were obtained.

She said: “Everybody knew the price would be $12 per square foot. They searched around for other places and nobody had a suitable place. I thought it was a decent rate and a good deal.

“But when you are dealing with large spaces like this people don’t realise and sit down, and try to figure out the price per square foot and what CAM (Common Area Maintenance) charges would be, because commercial spaces have always been known to be more.”

Mrs Wallace-Whitfield added that the Town Centre Mall’s relatively central location was a further advantage to locating the Post Office there as it made it more accessible to a wider range of people.

“I think that given the location of it being in a centralised area, and being easy to get to and from, people would prefer to go there,” she added. “You can get there by jitney, by car or on foot if you are in a nearby area.

“People from the south-east can get to it, people from the western area via the Tonique Williams Darling Highway can get to it, so I think for the location and for the price per square foot I thought it was pretty comparable to other commercial places.”

It is impossible to judge, based on the lease agreement itself, whether the Government received value for money. However, the details show that the Minnis administration kept to its word in achieving a rental rate of $12 per square foot when the Government pays $30-$40 per square foot at some of its other properties.

The Post Office’s annual rental rate was set at $632,952 over the five-year period for 52,746 square feet. This equates to $12 per square foot per annum, with the monthly rental figure pegged at $52,746. Thus the total gross rental income received by the Town Centre Mall’s owners over the five-year period to February 28, 2024, when the lease expires will be $3.165m

Jobeth Coleby-Davis, minister of transport and housing, last week told the House of Assembly that the true annual payments by the Post Office/government actually total $820,053 - equating to just over $4.1m for the full five-year term.

She added on the $75,954 in VAT that the Government must pay on the lease, at a rate of $6,330 per month, plus $111,177 per annum to reimburse the Town Centre Mall owners for financing a $500,000 upgrade to accommodate the Post Office.

However, given that VAT is the Government’s main revenue sources, that $75,954 per annum payment will come back to the Public Treasury. Therefore, an argument can be made that the true cost is really $744,129 per year or $3.721m over the full five-year lifetime of the lease.

The latter figure compares reasonably well alongside the $4m that the Minnis administration said would be required to outfit the former Phil’s Food Services building on Gladstone Road to accommodate the Post Office.

And the location left by the last Christie administration, the former Independence Shopping Centre on East-West Highway, was said to have cost $4m to purchase and another $4m-$5m to renovate.

The space taken by the Post Office at Town Centre Mall is also much less than the 75,000 square feet first envisaged when debate on the lease kicked-off in the House of Assembly in October 2018. That would have cost an annual rental payment of around $900,000, or $4.5m over the five-year lease lifetime.

The Post Office lease aroused significant controversy at the time because Brent Symonette, then a sitting Cabinet minister, is among the Town Centre Mall’s owners with himself and his brother, Craig, holding a 50 percent equity stake in the property. The other 50 percent is owned by the Darville family.

Mr Symonette was thus in a position to benefit financially from the Post Office lease, and many Bahamians including the then-Opposition Progressive Liberal Party (PLP) blasted the deal as a ‘conflict of interest’ given his Cabinet position, even though this was fully disclosed and the matter debated in Parliament.

Mr Symonette also said he was not present in The Bahamas when the Minnis Cabinet voted to move the Post Office to Town Centre Mall, as he was attending the Society of Trust and Estate Practitioners (STEP) Latin American regional conference. However, the then-Opposition viewed it as a deal that would make one of its rivals even wealthier.

Mrs Coleby-Davis said of the lease terms: “It should also be noted that the Government is responsible for the utility bills, including all connection fees and deposits, as well as property and personal injury insurance.

“When the lease ends, the Government would also have to pay any associated legal fees if litigation arises. The lease is binding for five years until February 28, 2024.”

Comments

Use the comment form below to begin a discussion about this content.

Sign in to comment