Brookfield: No plans to sell Atlantis in foreseeable future
The Canadian multinational taking control of Kerzner International (Bahamas) is moving to reassure Bahamians that it is “committed to stay the course”, Guardian Business can reveal, insisting that it has “no plans to sell it in the foreseeable future”.
Andrew Willis, senior vice president of Communications and Media at Brookfield Asset Management, said the company has a long-term interest in The Bahamas.
“We are committed to staying the course,” he told Guardian Business from Toronto.
“We are committed to the long-term value of Atlantis and the Ocean Club, and operationally nothing will change. Kerzner will continue to be the operator. We are very keen real estate investors with a long-term outlook.”
In a deal that shook The Bahamas yesterday, Kerzner international will sign over its Bahamian and Mexican assets to Brookfield in a debt-for-equity deal. Indeed, the fate of Atlantis, the largest private company and employer in The Bahamas, directly or indirectly touches nearly every industry in the country.
In a speech to Parliament yesterday, Hubert Ingraham, the prime minister, said “some 15 percent of all jobs in our economy are related directly to Kerzner International in The Bahamas”.
Brookfield agreed to exchange approximately $175 million of debt for the holdings, which include Atlantis Resort, The One & Only Ocean Club and the One & Only Palmilla in Mexico.
The deal ends more than a year of speculation and negotiation concerning the restructuring of $2.6 billion in mortgage debt.
“Nobody could foresee what happened in the last quarter of 2008,” Sir Sol Kerzner told the press conference yesterday.
“The world darkened. Unfortunately, I don’t think the world has fully recovered. I think in those circumstances, the debt issue had to be resolved. We have worked for the past year or even longer to get to a point where we would not be burdened by the debt and continue doing what we do best, which is managing and operating hotels.”
According to senior officials at Kerzner International, the management contract with Brookfield is “up to four years, and renegotiable thereafter” for the Atlantis property, and 15 years for the Ocean Club.
Brookfield, a multinational with a global portfolio of assets valued at around $160 billion, will subsequently acquire its first full ownership of a resort property, according to Willis.
He told Guardian Business that the company has a long tradition of investing in hotels, however. “Our main expertise is financing,” he said.
“Hotels where we have financing in place right now would include the Mandarin Oriental in Manhattan, the Hard Rock in Vegas and three other collections of hotels where we have been active.”
He added that Brookfield is “comfortable” owning a quality asset such as Atlantis.
In fact, Willis explained that the acquisition – with its 4,000 hotel rooms, water park, nightclubs and the Caribbean’s largest casino – fits with the firm’s overall corporate strategy.
“We are active lenders, and we like lending against irreplaceable, high quality assets. We continue to make these kinds of loans.”
Brookfield is “comfortable” with Kerzner International in place as manager and operator, he said, and any upgrades or major changes to the resort will rest in their hands.
George Markantonis, the president and managing director of Kerzner International (Bahamas), said the contract has put in place specifics on maintaining present employment levels, capital expenditures for improvements at the resort, and a budget for major additions or new attractions.
“For us, this is very exciting it has finally come to an end,” he said.
“As part of Brookfield, with strong support from the government, we’re delighted to say it has assurances with our owners.”
The sale is conditional based on government approvals and consents, which are expected to be achieved by the end of the year.