Chairman of the board of Bahamas Resolve Ltd. (Resolve) James Smith has confirmed that the special purpose vehicle (SPV) has moved beyond the "fact-finding" stage, which is now complete, and is into the "operational stage," as evidenced by the fact that Resolve is advertising properties and talking to potential buyers.
The company is advertising what Smith refers to as "high-end" properties -- some located on Paradise Island, some in Lyford Cay and some elsewhere. The properties include the block of two-level 2,760-square-foot, three-bedroom residential townhouses near Caves Village on West Bay Street, which were advertised in mid-December 2015.
Resolve was created as a special purpose vehicle of the government on October 31 2014 in order to help relieve the still-loss-earning Bank of The Bahamas (BOB) of bad commercial debt that was preventing the bank from achieving statutory mandates. Its creation was a subject of heated argument over whether the action would count as a government bailout of Bank of The Bahamas.
In a controversial move, the government swapped bad debt with an actual value of $45 million for government bonds worth $100 million. The remaining $55 million was posted to BOB's book as special retained earnings, allowing the bank to return to statutory capital levels. The bad debt was in the form of 13 non-performing loans with values that have not yet been made public.
Smith had previously indicated that Resolve was having difficulty getting all the documents associated with the loans from BOB, but assured that as of yesterday, that process was "essentially" complete. He spoke with Guardian Business about it yesterday.
"We had to first ensure that we had the proper documentation -- title, deeds, that sort of thing -- because you simply can't sell and make good on the property if you can't pass title.
"So once that was cleared up, we started to advertise them, especially the ones on the high end because that part of the market tends to be a little more liquid than the medium or lower end, not to mention that with over $600 million in non-performing loans in the entire system, mostly mortgages, there's a lot of competition out there."
According to Smith, "every bank and insurance company" is trying to unload property.
"In that kind of a market, the medium part of the market, I think, will be a tough sell for some time out. But we do know that there's always lots of interest in high-end properties. The wealthy are sometimes shielded from economic downturns. So we're putting those properties with a view to seeing if we can get some interest and get them off our books," he said.
Smith continued to assert that the market will determine the value, and said he expected that the high-end properties would be the likeliest to get closest to "value for money".
"With the others, we'll just have to wade in the same pool with all of the other foreclosures," he said.
Resolve Manager Raymond Winder of Deloitte and Touche was unavailable for comment up to press time last night.
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