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New-look BET building soon

Shawn Cumberbatch

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One of Barbados’ prime pieces of commercial real estate is to be redeveloped sooner than originally planned, as its owners grapple with the unexpected early departure of long-standing tenant Cable & Wireless (C&W).
The $34.5 million Wildey, St Michael property known as “the BET Building” was leased for 15 years by its former owner C&W, which trades as LIME, until October 2016, but about seven months ago LIME informed the current owners – Fortress Caribbean Property Fund Limited SCC, the National Insurance Scheme (NIS) and Sagicor – “of a phased withdrawal and early termination of the lease” effective the end of March this year.
The building is the property fund’s largest investment, and the company recently told its shareholders that “discussions with LIME are ongoing and no exact dates for exiting all the premises have yet been agreed upon, and the rent continues to be paid in full in accordance with the lease”.
However, the property owner also announced its decision to submit “a planning application” to the Town & Country Development Planning Office by the end of September as part of plans to redevelop the site, starting with its northern section.
About $240 000 has been spent “investigating” improvements to the property from which the joint owners earned $5 million in gross rental income last year and $4.8 million the previous year.
The loss of LIME as a tenant therefore means there will be a substantial drop in income for Fortress, which owns 57 per cent of the venture.
“The cell tower at the site is very important to their [LIME] business and they would like to keep it at the Wildey location. Our partners in the joint venture, the National Insurance Scheme and Sagicor have been fully engaged in the process,” Fortress reported in its recently released half-year report.
“Plans are being refined for the redevelopment of the site and the modernisation and upgrading of the main building are proceeding well. It is anticipated that a planning application will be made in the third quarter of 2014.”
Fortress chairman Geoffrey Cave had previously said that because “the triple net lease contract does not provide for an early termination of the lease” it meant that “the terms under which the termination can proceed will have to be negotiated”.
“The joint venture will be acting under careful guidance from legal counsel on this matter. Every effort will be made to ensure shareholders’ rights and interests are protected. This is the Fund’s largest investment and a short fall in future rental payments, if any, could have a material impact on the future profitability of the Value Fund shares,” Cave said.
Fortress said the BET Building “was acquired unde a sale/leaseback arrangement” where C&W had “an option to repurchase the property at the end of the lease term of 15 years for a purchase price of no less than the fair value of the property at that date”.