Resort property sales on the rise - Breezes MoBay, Richmond Hill among real-estate listings
Published:Sunday | April 24, 2011 | 12:00 AM
Avia Collinder, Business Writer
A number of resort property owners, particularly in the small and medium category, have quietly been listing their hotels for sale, but many are going on the market at unrealistic prices that serve only to drive up unsold inventory, realtors tell Sunday Business.
Alongside the sell-off of government-owned properties, CEO of La Maison Property Services Edwin Wint said Wednesday that there is a noticeable uptick in resort listings, which he attributes to foreclosures on assets of underperforming hospitality businesses.
Recent market listings include Richmond Hill Inn in Montego Bay, for which the asking price is US$15 million (J$1.28b). The sale is being brokered by Remax Premium.
The former Breezes Montego Bay, a 124-room hotel on which the valuation is US$14.32 million (J$1.23b), is being marketed by WIHCON Properties Limited on behalf of co-owners the National Insurance Fund (NIF) and National Commercial Bank.
Sunday Business was unable to get a total count of listed hotels.
Wint says inventory has been swollen by properties whose price points "are not right", and so remain unsold, while newer listings are connected to terminated leases and management agreements.
Wint says La Maison has four hotels on its list for sale, with asking prices up to US$4.25 million (J$365m) for a 79-room property in Oracabessa, St Mary.
Hold or sell
Lambert Johnson, agent with Remax and representative for Richmond Hill, says he also has four other resort properties on his listing - two in Montego Bay and two in Negril - whose owners were "entertaining offers".
Many of the properties on offer are small hotels, like the 15-unit Seacrest hotel in Portland listed by Millennium Properties. Agent Rosemarie Bisasor says the asking price is US$562,800 (J$48.3m).
Johnson says that some owners, having benefited from 10-year tax breaks available to new resort owners, were selling in order to reinvest and re-qualify for the tax benefit.
But agencies like the National Insurance Fund have different reasons for exiting some of its tourism investments. Breezes Montego Bay, which sits adjacent the world-famous Doctor's Cave beach, was listed by WIHCON in mid-April after discussions with the Royal Decameron group failed to secure a deal, reliable sources tell Sunday Business.
The hotel, which was once run by the SuperClubs hotel group, owners of the Breezes name, is now vacant.
The seaside property was built in 1995 by NCB Investments - then the investment arm of the banking group. NCB pension fund retained 51 per cent of the shareholding, with the remaining 49 per cent purchased by the NIF for J$271 million.
"In both cases (Breezes MoBay and Rio Bueno) there were challenges with regard to the landlord-tenant arrangements. In the case of MoBay, the decision was taken to exit the business, while at Rio Bueno, we are seeking new tenants," said Audrey Deer-Williams, senior director for investments at the NIF.
"In fact, in the latter case, all options are on the table," said Deer-Williams, pointing out as well that the fund might sell the Breezes Rio Bueno (BRB) property at Braco in Trelawny.
The investment manager said the decision to hold or sell is in part dependent on the returns on investment a property can or will generate, and that so far, the NIF has been seeing positive returns, "with BRB being probably the best performer," said Deer-Williams.
"Despite the financial crisis, arrival numbers were up, although there would have been some discounting," she said.
The fund acquired Rio Bueno, formerly known as Grand Lido Braco Resorts and Spa, in the year 2000 for US$23 million after the previous owners racked up almost US$40 million in debt. The deal included both the resort hotel and 48 acres of adjoining real estate.
The hotel continued to operate under operating lease held by SuperClubs. Rental was set, at the time of sale, at US$200,000, or J$9 million, a month for the Braco property.
The rental remains the same, with Deer-Williams indicating that the rate is based on valuations.
The NIF, the state-run agency responsible for investing pension receipts and operating the now J$62 billion fund from which government retirees are paid their pensions, is sole owner of the Rio Bueno property in Trelawny, as well as other resorts such as El Greco Resort in Montego Bay and Point Village Resort in Negril.
Different arrangements
"There are different arrangements with the properties: we own units at Point Village - those were in a rental pool, but there was no guaranteed returns on those units; El Greco is self-managed, so there is a net profit and capital gains from that property; Breezes MoBay had a guaranteed minimum rent of US$100,000 per month," Deer-Williams said.
In February, the Development Bank of Jamaica (DBJ), which is also state-owned, put the former Hedonism III property on the market. In December, the DBJ also seized and placed on the market the Falmouth-based FDR Pebbles, Ocean Sands in Ocho Rios, St Ann, and the Parotee in St Elizabeth, which, sources say, have been unable to pay off loans from the financing agency.
According to Wint, properties with the right price points will sell. Interested investors are doing due diligence on the real-estate assets to determine their right value. These exercises often reveal that the properties are overpriced, Wint said.
He notes that for now small, boutique hotels are most in demand.
- Jamaica reports rebound in cruise ship tourists
Jamaica benefited from a nearly double-digit increase in cruise ship arrivals during the most recent busy winter season, the Caribbean country's tourism minister announced Tuesday.
Edmund Bartlett said cruise ship tourists surged by 9.6 per cent this high season over the same period in 2009-2010, an increase of 34,954 visitors. The high season for Jamaica's tourism sector came to an end on April 15.
Bartlett, who made the comments at a conference in the tourism Mecca of Montego Bay in the island's north, also said the tourism industry brought in foreign exchange earnings of US$852.6 million during the winter, a six per cent increase over the US$804.5 million earned over the same period last season. Stopover arrivals increased by 5.6 per cent, he added.
Remarkable performance expected
"The stage is now set for yet another remarkable year of performance in terms of arrivals and foreign exchange earnings," he said.
The rebound of cruise ship passengers is especially good news for tourism-dependent Jamaica since the number of ship tourists visiting the island dropped by 1.4 per cent last year to 910,000.
Jamaica hopes to capture even more of the cruise ship market with the recent opening of a two-berth cruise port in the north coast town of Falmouth.
Royal Caribbean Cruises Limited and the Port Authority of Jamaica developed the US$220 million, three-phase port project, which is nestled between the resort cities of Montego Bay and Ocho Rios.
Although the port received its first visiting cruise ship in February, officials held the opening ceremony last month for the arrival of the 16-deck, 225,000-ton (204,100 metric tonne) Oasis of the Seas.