Govt aims to help developers secure financing for hotel
Government is lending its full support to the St Regis hotel project in the City of Hamilton and plans to bring legislation that would help the developer secure full financing in the coming months, Premier Craig Cannonier said.
Michael MacLean of Par-la-Ville Hotels and Residences Ltd which is developing the $350 million project, has been seeking a $15 million bridge loan in order to secure a full financing arrangement which would allow the project to proceed.
In an interview with
The Royal Gazette, Mr Cannonier indicated that City Hall had been willing to use some of its land to guarantee the loan.
“We do know that the leaseholder was looking for a guarantee prior to us coming to Government and it hadn’t been awarded before,” the Premier said. “Because it wasn’t awarded by the Government, the Corporation of Hamilton is seeking to award a guarantee as a bridging loan for them to go ahead and get financing in full for the project. There are some legalities around that that we are unsure of.”
He explained: “We know that the Corporation has a limited ability to give a guarantee, especially for large projects like this. So we are looking to bring forward to the House legislation that will allow that to happen.”
Mr Cannonier said his administration hopes to bring the legislation to the House of Assembly in September.
This newspaper understands that Mr MacLean had already rejected an offer to finance the loan because the terms were too onerous.
Plans for a hotel at the Par-la-Ville were first announced in 2007 with Ritz Carlton attached. Starwood Hotels and Resorts, which owns the luxury St Regis brand, was named as a new partner in 2009 when it was stated the hotel would open in 2013.
The developers aim to build a 656,000 sq ft, 137-room hotel, 95 luxury residences, and three levels of underground parking.
Mr MacLean said yesterday that he was pleased that Government was supportive of the project and hoped it kept its word.
“I think its important to look at creative ways of creating employment because its not going to be easy for us to attract investment,” he said.
“There’s a very negative connotation when you talk about investing in Bermuda to foreign investors. One investor said money only goes where it’s welcome. And Bermuda has not been very welcoming to the foreign investor. I commend the Government for recognising that there is a need to remove the red tape and create more opportunities for foreign investors to come to our shores. I hope they keep their word in utilising the Economic Development Committee to make this a reality, not just empty speech.”
Mr MacLean explained that he already had a financing commitment in place, but that the Corporation’s involvement will demonstrate that Bermuda has “skin in the game”.
“The option that the Corporation has put in place is not my only option. It’s the easier of the options I have from the investors’ standpoint. The Corporation’s commitment shows that Bermuda is also interested in the development.
“I could arrange all of the financing but if Bermuda in general — including the Government or the Corporation — don’t welcome the investment, it will never happen.”
And Mr MacLean said that the former Government had wanted to assist by providing a sovereign guarantee for the bridging finance.
Just prior to the December 17 election “they were deep into their due diligence. We were pretty far along in consummating the deal,” he said.
Mr Cannonier told this newspaper that his administration had done everything to expedite the development.
“Whenever requests were made from the leaseholder we went ahead and gave approvals. Now we are at a position where the Corporation needs to be able to guarantee this and we are looking to make that happen. We don’t believe that’s going to happen until September.”
And he confirmed, when asked, that Mr MacLean should expect that the project will benefit from a hotel development stimulus package.
“Absolutely, he should expect that. That’s what we are here for,” he said.
“We’re here to ensure that Mr MacLean gets the privileges of any other hotel potential or renovations that happen. He’s just like another one of the players out there. We want him to succeed. That’s why we’ve been working diligently over the last couple of months to get him up and going.”