Starwood rejects Caroline Bay funding claim
An American investment company has countered a claim that it was willing to provide funds to salvage the failed Caroline Bay development.
Craig Christensen, one of the developers behind the project at Morgan's Point, had urged the Bermuda Government to give his group another chance and referenced Starwood Capital as willing to invest $250 million in the project.
Mr Christensen's comments appeared in an article in The Royal Gazette on Monday. We reached out to Florida-based private-equity group Starwood for confirmation of the firm's willingness to back the project, but received no response.
The Bermuda Government then, “out of an abundance of caution”, made contact with senior Starwood representatives, a government spokeswoman told this newspaper on Tuesday.
She added that a Starwood spokesman had said: “We have seen the recent article that mentions Starwood Capital as a $250 million funding source for Caroline Bay. While this is a project we have discussed in the past, it is not a project that we have ever seriously considered.
“It is concerning that our name is being used out of context and it would be very problematic if someone was using our reputation to gain some advantage with any of the involved parties to the transaction especially the Government.”
The Royal Gazette tried to confirm with Starwood that the firm had sent these comments to the Government, but did not receive an answer by press time.
Mr Christensen said yesterday: “I have no idea where this statement originated, however we were not able to conclude a deal with the Government and they understood that Starwood would provide the funding during those times and the Government was fully aware.
“Any agreement, whether it be Starwood, or any other lender for that matter, would be subject to the terms and conditions at that time.
“I am sure the Government would be doing their appropriate due diligence on any lender. Involving major financial institutions to comment at this time would not be appropriate, or helpful, and hypothetical.”
Mr Christensen, along with fellow Bermudian businessmen Brian Duperreault and Nelson Hunt, acquired the former base land at Morgan's Point on which to build a $2 billion luxury resort.
However, the resort scheme — which was to include hotels, residential units and a marina — was beset with financial problems and the plans were gradually scaled back over the years.
In 2016, the former One Bermuda Alliance government signed a guarantee of $165 million on the project to enable more funding to be raised.
Work on a hotel there stopped in March 2018 after costs overtook financing.
Last September, after the developers defaulted on loan payments for the project, the Government stepped in and acquired the interests of the loans, raising the country's debt ceiling by $250 million in the process.