Bahamas must have ‘national response’ to Atlantis sale
The Bahamas must prepare a “collective national response” to the sale of Kerzner International to Brookfield Asset Management, a former state minister of finance said, as the country should consider not what happens tomorrow – but a little further down the road.
James Smith, the chairman of CFAL, told Guardian Business that while the management structure remains secure, Bahamians must be aware that Brookfield’s core business is not tourism or operating hotels.
With assets in the range of $160 billion worldwide, Brookfield’s interests include real estate, renewable power generation, infrastructure and private equity. Primarily focused on financing, it holds debt in many elite hotels around the world, including the Mandarin Oriental in Manhattan.
According to senior officials at Atlantis, the management agreement between Kerzner International and Brookfield will be “up to four years” at Atlantis and 15 years at the Ocean Club.
Smith said Bahamians must view the acquisition for what it really is – an investment.
“One would expect they will eventually look around to see the best deal for the property,” he explained.
“They are looking for the best returns in a bad market. It’s a good property, and if someone comes along and offers a good price, why not take it? We can’t just sit back and breathe a sigh of relief. At least Kerzner was a known entity in the hotel industry and The Bahamas. We need to sit down and try to charter a course.”
In an interview with Guardian Business, Senior Vice President of Communications and Media at Brookfield, Andrew Wills, said the company is “committed to staying the course.” No plans, he said, are in place to sell the holdings in the forseeable future.
“We are active lenders and we like lending against irreplaceable, high-quality assets,” he said. “We continue to make these kinds of loans.”
The Chairman of the Bahamas Chamber of Commerce and Employers Confederation (BCCEC), Winston Rolle, said the management agreement of four years on the Atlantis property is a cause for concern.
“Four years is not a very long time, particularly in that industry,” he said.
“When you take a look at the number of people impacted by all of is, it’s very significant. A concern I have had from way back when, is if Kerzner is not in a position to operate this property in the future, how many are there to step up?”
Rolle feels tremendous uncertainty and “a lot of questions” now surround the fate of Kerzner International’s holdings in The Bahamas. He doubted that the transfer of assets will have any considerable ramifications in the near future, although the chairman wondered what the impact would be of Kerzner no longer having ownership in Atlantis.
He told Guardian Business that “when you’re on the hook for something, you approach things differently.”
Smith questioned how Kerzner would operate under a contract when he wasn’t “calling his own shots.”
Either way, Rolle emphasized that a thorough and constructive working relationship between Kerzner International and Brookfield will now be essential to the health and prosperity of The Bahamas at large.
He agreed with Smith that a national response is needed, whereby options for diversification within the economy are closely explored.
“This is a clear indication we are not masters of our own domain,” Rolle said. “The crux of our economy is in the hands of someone else, and not Bahamians. That’s something we need to be mindful of as well.”