The Tribune

• Sterling strikes deal to run south Abaco project

• Plans to develop boutique hotel, change model

• Schooner stakeholders urged: ‘Pull together’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Nassau financier/developer has struck a deal to take over management, and develop a boutique resort, at a south Abaco community once hailed as a sustainable development model for The Bahamas.

Sterling Global, which is behind the multi-million dollar Hurricane Hole development on Paradise Island, has partnered with the original Schooner Bay developer to “bring that project where it needs to be” and oversee all aspects of its operations - including sales and marketing - after its progress has stagnated in recent years.

The deal, which was last night confirmed to Tribune Business by multiple sources, and further affirmed by e-mails obtained by this newspaper, will likely see Schooner Bay’s development model alter from that of a pure residential community to a resort-led development.

A note of the April 2, 2022, meeting where Sterling and its senior executives were introduced to Schooner Bay residents and other stakeholders, disclosed that Homeowners Association (HOA) fees will likely increase as Sterling moves to match the development’s income streams with operating expenses.

Although the length of Sterling’s tie-up with the original developer, Schooner Bay Ventures, was not disclosed, a note on the meeting being circulated to homeowners suggested it was likely a long-term partnership and that the message had been sent that all parties - developer, manager, homeowners and amenities - “need to pull together to make Schooner a success”

David Kosoy, Sterling Global’s founder and executive chairman, last night said he was off-island in an e-mailed reply to Tribune Business inquiries. “It’s something that can really bring that development to where it needs to be,” one source, speaking on condition of anonymity, said of Sterling’s involvement at Schooner Bay.

“It’s going to require a lot of work, and a lot of capital, but they [Sterling] know how to find capital. Sterling funds projects all over the US, Canada, UK and Ireland. They’re based in The Bahamas, but also do a lot of work in the Cayman Islands and Turks & Caicos.” Sterling is also developing the $352.2m Montage Cay and Marina Project on the former Matt Lowe’s Cay in Abaco, a development billed as creating 250 full-time jobs.

With Sterling already enjoying strong Abaco connections, another source said of its Schooner Bay involvement: “An e-mail went out to the homeowners about three weeks ago, and then Sterling had a meeting with the owners on-site and virtually. They’ve been pretty forthright that they are partnering and doing business, and that Sterling is going to take over sales and management and develop a boutique hotel.”

This was all confirmed by documents obtained by Tribune Business. A March 29, 2022, e-mail sent out in the name of Dr David Huber, Schooner Bay Ventures’ president and owner, said: “We write to you today to advise you that Schooner Bay Ventures is partnering with Sterling Global Developments to manage Schooner Bay.

“We will share more about this new partnership in the near future, but in the interim, we would like to introduce you to members of the Sterling team on April 2, 2022 at Schooner Bay at 3 pm at the cabana. For those of you who are not currently on property or not available to be there, we will provide a Zoom link to the meeting.” The e-mail was issued by Schooner Bay Ventures’ US attorney, Tina Gascoigne.

A summary of the meeting, subsequently obtained by Tribune Business, confirmed that it was attended by both Mr Kosoy and Bill Green, Sterling’s president, as well as Michel Neutelings, who was described as the “main operations guy for Schooner”. Mr Neutelings, a partner in the Milo Group, was also lead project manager for the $200m Children’s Bay development in Exuma, although construction work has yet to start there.

Also present for the Schooner Bay meeting were Dr Huber and Ms Gascoigne, together with representatives of existing amenities at the community such as the Sandpiper Inn and Captain’s House. “Dr Huber started the meeting explaining that, to-date, he has invested $100m in Schooner,” the meeting summary said. “He has been working with Sterling Global for a while now to get an agreement for development of Schooner.

“Sterling Global is overseeing about $9bn in developments in the Caribbean, including on Paradise Island and on Matt Lowe’s Cay just east of Marsh Harbour (also called Montage Cay). They have 100 employees who live in Nassau. Bill specialises in overall development and Michel in operations. Michel will be on-site frequently and is available for any questions and concerns. They really want to improve communication with homeowners.

“There were several key messages during the session, the main one being they are looking to develop Schooner as a resort not a community (ie; not like Hope Town on Elbow Cay). As a resort, Schooner needs people to want to come and stay. Therefore we need to add some amenities and up the rental turnover, number of visits and length of visit stay. To that end, the first development will probably be a boutique hotel with a restaurant that is always open,” the note added.

“Once revenues have increased, other amenities like a pool etc will be added in a phased approach; increased revenues equals increased amenities. Their [Sterling’s] model is to develop specific areas. Once that area is successful, they will go on to the next, hence the phased approach. Their model has been very successful to-date.”

No figures for investment and jobs created, or timelines, were provided in relation to the boutique hotel. “In the short term, they will be looking at the operational costs for running Schooner (geothermal, water/waste management, landscaping, security, etc) versus the revenue from things like HOA (Homeowners Association) fees,” the meeting summary said. “It appears some homeowners have not been paying their HOA fees.

“Once this assessment is complete, there is a strong possibility that HOA fees will increase. As well, they will be looking at consolidating other services like property management, marketing and new home sales/resales to achieve economies of scale (lower overall costs) and consistency in services. This approach should increase revenues for Schooner and increase rental income and home values for homeowners.

“They will be reaching out to each of us to get our thoughts but, in the end, the message was we are all part of the same team and need to pull together to make Schooner a success. Dr Huber and Sterling will assess their success on an ongoing basis. No exact length of term was discussed, but it will certainly be over a longer term, not six to 12 months.”

Suggesting that a new development plan for Schooner Bay is in the offing, the meeting summary added: “Over the next month or two they [Sterling] will be reviewing the Schooner site plan, and will come up with a new plan that will probably include changes to lot sizes, building requirements, common areas and locations of community amenities.

“Overall they were very impressed with the construction quality of the buildings at Schooner, and said they would not lower any building standards for future construction. They were also impressed with the harbour but are bringing in some engineering experts to see what improvements might be made.

“Enhancing the marina and its services will definitely be a priority (they are currently developing a very high-end marina on Paradise Island, just east of Atlantis) so have access to significant expertise in this area.”

Schooner Bay was initially held up as a model for sustainable, resilient development that The Bahamas is increasingly seeking to cope with the realities of climate change. However, its rate of build-out has slowed dramatically for much of the past decade.

Schooner Bay’s abrupt change in direction appears to have coincided with its decision in 2013-2014 to part ways with Bahamas-based developer, Orjan Lindroth, and his Lindroth Development Company.

The latter had acted as the 220-acre project’s master planner and development partner since inception, handling all real estate sales and promotions. They were replaced by a succession of foreign sales companies who met with seemingly limited success.

While Mr Lindroth and his company were Schooner Bay’s public face, the project’s financing was provided by Dr David Huber. Dubbed “America’s richest Mormon”, Dr Huber made a multi-billion dollar fortune from patenting fibre-optic technology and then taking the companies that owned it public on the US stock market.

Tribune Business wrote a series of articles in late 2017 questioning the project’s management and other practices, with many of the issues raised not being directly addressed by Schooner Bay Ventures. The project is one of the few developments outside Nassau to attract Bahamian buyers, one of whom is ex-prime minister, Dr Hubert Minnis.