Atlantis gets new owner
After 17 years of investing billions of dollars to transform Paradise Island into one of the world’s premier destinations, Kerzner International Chairman and CEO Sir Sol Kerzner announced yesterday that his company has transferred ownership of Atlantis Resort and the One&Only Ocean Club to Canadian real estate conglomerate Brookfield Asset Management, one of his company’s lenders.
Sir Sol also said at a rare press conference at Atlantis that he has received a commitment from the new owner that staffing and capital investment levels will be maintained.
A press statement released by Kerzner International said Kerzner entered into an agreement in principle with the lender for its Bahamian and Mexican assets.
Brookfield has agreed to exchange approximately $175 million of debt for the equity of the Bahamian and Mexican companies, the statement said.
Sir Sol said at the press conference that Kerzner International will continue to manage Atlantis, One&Only Ocean Club and One&Only Palmilla.
The Nassau Guardian confirmed that Kerzner has a contract to manage Atlantis for four years and 15-year contracts to manage the two One&Only properties.
Sir Sol pointed out that his company had been working for the past year trying to restructure its debt.
In the statement, Sir Sol said that as the manager of the Bahamas and Mexican locations, Kerzner will remain in control of all aspects of running the businesses and the resorts will continue to operate as they always have.
“For some time now, we have been actively engaged in constructive discussions with our various lender groups in order to improve our company’s capital structure, optimize the value of our assets and position Kerzner for sustainable long-term growth as a global management company,” Sir Sol said in the statement yesterday.
“Today’s announcement is an important step towards that goal, allowing Kerzner to substantially reduce debt and streamline our balance sheet and operating structure.”
Speaking to reporters at Atlantis yesterday, Kerzner recognized the sentimental significance of the moment.
“You don’t develop this over all these years and not feel attached,” he said.
“…We completed all the developments here in ’07. We went private the year before that. In doing that there was quite considerable debt that was taken on.
“At that time the economies were brisk, they were great, the occupancies were terrific and business was good. Nobody, I think, could foresee what happened in the last quarter of ’08. I think basically that’s where it started.
“I think when Lehman Brothers [collapsed] in September 2008, the world changed and unfortunately the world, I don’t think, has fully recovered.
“And I think in those circumstances the debt issue had to be resolved, and we’ve been working for the last year or even longer in order to try to get to a point where we could not be burdened with the debt and continue what we do best, and that’s operating and managing hotels and to continue with the Atlantis brand [and] One&Only, and to continue operating here in terms of the management agreement.
“To me, that was all important.”
Sir Sol said Kerzner International and the government both wanted a commitment on the securing of the more than 7,000 jobs at the Paradise Island properties.
“We know where we were in 1993 when we first came in here and I think it’s very important that… the investment in the property will be maintained and the standard of the service that’s being provided by the people will be maintained,” he said.
“So the stability of our workforce, I think, is key to everybody and I think that is appreciated by all concerned in this transaction.”
He added, “I got to say that the Bahamian folks who work for us have been outstanding, and the level of service that we’ve achieved has been first class, and I think that’s what it’s all about.”
Kerzner noted in the statement that Brookfield is a global asset manager with approximately $150 billion in assets, and has an over 100-year history of owning and operating assets with a focus on real estate, infrastructure, power and private equity.
The statement said that with decades of operating experience and over $69 billion of property assets, Brookfield has developed an expertise in real estate investment that spans the globe.
The statement said Kerzner will continue to own the Atlantis and One&Only brand names and retains the right to develop additional resort properties under these names.
“I think when I look at [the 50 years since] I’ve started in this business in hotels, the developments here on Paradise Island, particularly Atlantis, which is a brand that we created back 17 years ago, have been for me one of our great achievements,” Kerzner said.
“ It’s been probably the most exciting development I’ve been involved in and I’m very pleased that we continue to be fully involved in it.”