NIF weighs full acquisition of MoBay hotel - NCB Pension Fund owns 51% - Property unsold after two years

Avia Collinder, Business Writer

The sellers of the former Breezes Montego Bay hotel got just one 'real' offer in the two years that the property has been on the market, and even that deal went nowhere.

Now the minority shareholder National Insurance Fund is considering buying out majority partner NCB Staff Pension Fund, well-placed sources tell Wednesday Business.

NIF owns 49 per cent and NCB Staff Pension Fund 51 per cent of the hotel. The asset is held by the partners through a company called Resorts Beach Development Limited.

NIF is said to be considering the efficacy of full ownership but is yet to make a final decision on the acquisition. At the very least, it would boost the fund's real estate holdings and would fit with plans to realign NIF's asset portfolio, which is heavily weighted to government securities and would boost the fund's investment revenues.

Real estate holdings valued at just under J$10 billion now account for close to 16 per cent of NIF's asset portfolio.

NIF said it was collecting fees of J$1.2 million per year from the operator of the hotel at the time of its closure.

ISSUE UNDER REVIEW

NCB Insurance, the fund managers for NCB Staff Pension Fund, directed queries to WIHCON Properties Limited, the marketer of the hotel. WIHCON Property Manager Ian Hall redirected Wednesday Business to NIF. The fund's director of investment, Audrey Deer-Williams, said the issue is under review, but otherwise had no comment.

WIHCON was commissioned to sell the property in 2011, two years after it was shuttered. Prior to that, it was managed by the SuperClubs resort group under its Breezes brand.

Deer-Williams said WIHCON had just one real offer for the property in the third quarter of 2012 from hotelier and lawyer Christopher Issa. A previous offer from an unnamed party was rejected.

Issa's Crissa Group backed away from the negotiations when it entered the contracting phase, according to Hall, who did not refer to Issa's group by name but as the "potential purchaser".

The property was readvertised but WIHCON received no responses, Deer-Williams said.

NIF began considering full ownership after the Chris Issa deal was derailed, sources said.

The hotel was built in 1995 by NCB Investments, which retained 51 per cent of the shareholding, while the remaining 49 per cent was purchased by the NIF for J$271m.

The 124-room hotel was valued at US$14.32 million when it was first placed on the market by WIHCON Properties on behalf of the owners in 2011. At that price, the 51 per cent acquisition would cost US$7.3 million.

The hotel, which sits on the beachfront along Gloucester Avenue, Montego Bay, has been shuttered since 2009 after the management agreement with SuperClubs ended. The building is in need of refurbishing.

The value of NIF's real estate portfolio was estimated at J$9.98 billion as of March, up by J$2.26 billion in a year. Deer-Williams previously advised that the improvement is linked to a new acquisition.

The pension fund has purchased land known as Montego Park in the resort city for J$1.5 billion. The seller is Montego Park Estates Limited, which Companies Office records indicate is owned by Dennis Morgan.

The land deal is expected to close some time this fiscal year.

Meantime, Deer-Williams said consideration for the hotel purchase is in its early stages.

"We are still at a preliminary stage," she said. "We can't give a definitive time frame" on the decision to purchase, she said.

NIF plans to grow its real estate portfolio to J$12 billion this fiscal year, according to disclosures in the newly released Public Bodies report produced by the Ministry of Finance. It would increase the proportion of real estate holdings or investment properties to about 19 per cent of total assets.

The projections are based on planned improvements to Braco hotel and other capital expenditure.

business@gleanerjm.com