Minister On Guarantees For Morgan’s Point
Minister of Finance Bob Richards spoke about the execution of various Government Guarantees on behalf of Morgan’s Point in relation to the financial close for the construction of the new hotel and condominium project to be managed as a member of the Ritz Carlton hotel and residences brands.
Speaking in the House of Assembly today, Minister Richards said, “It is particularly noteworthy that the principals of Morgan’s Point Ltd., Messrs. Christensen, Hunt and Duperreault are all Bermudians who have persevered a long and frustrating journey to get this far. Their efforts are most commendable.
Slideshow with four renderings of the planned development at Morgan’s Point
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“As previously announced, Government has supported the financing of this project by committing to provide a guarantee of up to $165 million for a project cost of $400 million,” continued the Minister.
“Government has also helped to enable this very productive reuse of the former Naval Operating Base by spending in excess of $18 million to remediate the property.
“This support is tangible evidence of Government’s commitment to the redevelopment of the tourism sector,” said Minister Richards adding that “this project will provide jobs for Bermudians in the construction phase as well as jobs for Bermudians once the facility becomes operational.”
“The Guarantees provide that the Government cannot be legally required to fund more than $165 million to repay the lenders if MPL is unable to perform their obligations to the lenders.
“The financing being guaranteed is provided under separate groups of loans each maturing in five years with two 1 year options to extend. Three of the loans have been provided by Bermuda based re-insurance companies and another is provided by a U.S. based Construction Lender.
“It is also important to note that the Government will be compensated for providing the guarantees and the guarantee agreements include conditions typically included in non-affiliated financial guarantees,” added Minister Richards.
The Minister’s full statement follows below:
Mr. Speaker, in accordance with Section 2 AA [3] of the Government Loans Act 1978, I rise this morning to inform this Honourable House of the execution of various Government Guarantees on behalf of the Morgan’s Point Limited in relation to the financial close for the construction of the new hotel and condominium project at Morgan’s Point to be branded and managed as a member of the Ritz Carlton hotel and residences brands. This is indeed an historic project in many ways, with many “firsts”:
- 1. First major productive reuse of former base-lands
- 2. First major hotel project whose financing has been supported by Government
- 3. First ultra-luxury brand for Bermuda
- 4. First absolutely new hotel project to be successfully financed in a generation
- 5. First major hotel project supported by IB
Mr. Speaker, it is particularly noteworthy that the principals of Morgan’s Point Ltd., Messrs. Christensen, Hunt and Duperreault are all Bermudians who have persevered a long and frustrating journey to get this far. Their efforts are most commendable.
Mr. Speaker, as previously announced, Government has supported the financing of this project by committing to provide a guarantee of up to $165 million for a project cost of $400 million. Government has also helped to enable this very productive reuse of the former Naval Operating Base by spending in excess of $18 million to remediate the property.
Mr. Speaker, this support is tangible evidence of Government’s commitment to the redevelopment of the tourism sector. We reiterate our belief that there are many factors surrounding the decline in our once preeminent industry. One of the key factors is the investment piece: the ability to promote a value proposition for investors in Bermuda hospitality. The financial closing for this project is real world success in that objective.
Mr. Speaker, this project will provide jobs for Bermudians in the construction phase as well as jobs for Bermudians once the facility becomes operational.
Mr. Speaker, the Guarantees provide that the Government cannot be legally required to fund more than $165 million to repay the lenders if MPL is unable to perform their obligations to the lenders. The financing being guaranteed is provided under separate groups of loans each maturing in five years with two 1 year options to extend. Three of the loans have been provided by Bermuda based re-insurance companies and another is provided by a U.S. based Construction Lender.
Mr. Speaker, I am pleased that Bermuda based Re-insurance companies have shown confidence in the project and the tourism sector and Government is delighted that they could assist in making this happen.
Mr. Speaker, it is also important to note that the Government will be compensated for providing the guarantees and the guarantee agreements include conditions typically included in non-affiliated financial guarantees.
Mr. Speaker, I am confident this financing will ensure that this development will turn a brown field site into a stunning new resort and marks one more step, but a major step, along the journey back to success for our tourism sector.
Mr. Speaker, I’d like to thank all those whose hard work has enabled us to get this far, especially PS Richardson, FS Manders, Andy Burrows of the Tourism Authority, Minister Gibbons, the AG and of course former Minster Crockwell.
Thank you, Mr. Speaker
I hate to be negative, particularly as I wholeheartedly support the redevelopment of this site into something useful, but I’m a little confused. I see lots of beaches in areas where they don’t occur naturally. How are they planning to get the sand to stay there, and has a comprehensive Environmental Impact Assessment been done? Also, why is the Government helping to finance this exactly?
This Government….please.
How exactly will this bring tourists to Bermuda? Why didn’t they create something extraordinary that could really boost tourism. An Atlantis type resort would have been a good idea.
“1. First major productive reuse of former base-lands” A sad indictment of successive governments
Great news but details are important.
Given the government guarantees, the public should be apprised of the actual loans granted by the Bermuda based IB companies and the related interest rates.
Proof of the IB support will be evident if the interest rates on the loans reflect the Bermuda Government guarantee. On that basis, the rates should be low since there is virtually no risk of loss to the IB companies.
A new hotel, construction jobs, hotel jobs, tourism jobs. New tourist attraction.
Jobs, infrastructure, and high-end tourism.
Gotta love it.
$18 million to remediate the property.
Mmmm where have I heard $18 million before.
Except that, under this Government, you simply have to submit a PATI request and ask that very question.
The OBA are having to spend YOUR taxes in finding where we all know the missing millions when under the PLP.
Low ball price – if they can do it for $400 mill. let them build the Airport.
These guys have to generate $1.6 mill. per day in revenue just to earn a comparable rate of return on equity (est. $600 million)that other publicly owned hotels earn. Very difficult in Bermuda given the decline in tourism. OBA should not have this much power.
You don’t know what you’re talking about….lmfao!
They have to earn $548 million/per year for a comparable return on equity of $600 million. Wow!
“Mr. Speaker, as previously announced, Government has supported the financing of this project by committing to provide a guarantee of up to $165 million for a project cost of $400 million. Government has also helped to enable this very productive reuse of the former Naval Operating Base by spending in excess of $18 million to remediate the property”
LOL and I thought we had no money Bob! After all the persistent attempts to force Government workers to accept continued furlough days!
ok – so is it a productive use or not? You can’t have it both ways. Also, the remediation was a legal requirement, absolutely nothing the government could do about it
sit down, it will muffle your words
anything that government has a hand in, ends up costing me money!
Why is government giving anything to these billionairs l ask?
To stimulate the economy! Good grief, it’s like teaching my 5 yr old.
The remediation was a legal requirement, they had no choice.
I just wonder what the hotel packages are going to be and would Bermudian people be paid to the cost of living because everything is going up and the tourist season really ain’t doing so good right now. We will get a lot of revenue from the cruises but hotel prices are ridicules and don’t include a lot of with what they are paying out more tourist I have heard lately are going down to other islands simply because its so much cheaper and offers so much more for what you are paying. Its a great location for the redevelopment it looks really nice but you have to wonder what else would the hotel be offering to make tourist want to come and stay there.