RADISSON Blu Mirage Resort Fiji announced last week that it has reached two major milestones.
One: that it is now funded by the Fiji National Provident Fund (FNPF) and BSP Financial Group (Fiji) Pte Limited (BSP), and two: full-scale construction has now commenced on Naisoso Island.
“This is an extraordinary moment for everyone involved,” said Bob Lowres, managing director of Relcorp (Fiji), the company behind the development.
“Securing finance from such reputable institutions as FNPF and BSP reinforces our vision, and the start of full-scale construction moves us closer to turning our plans into a world-class experience,” Mr Lowres added.
Financing syndicate
The Radisson Blu Mirage Resort, a limited collection of brand new luxury 1, 2 and 3 bedroom apartments that offer a premium waterside lifestyle, is a $250million project that has not only met the minimum investment benchmark for two of Fiji’s biggest financiers, it has also led to the creation of a powerful financing syndicate between them.
One that is likely to radically change project financing in Fiji.
“We are proud to be the lead agent in this inaugural arrangement with FNPF to deliver a syndicate loan facility as we enter into our first finance partnership to support this promising large development project undertaken by prominent property developer Bob Lowres through his company Relcorp (Fiji),” BSP country head Haroon Ali said during the signing ceremony in Suva last week.
“This deal exemplifies the combined strength of both the institutions to leverage resources and expertise to enable such large developments that foster Fiji’s economic progress”.
The collaboration, Mr Ali added, marked a pioneering step in their relationship, as they establish a syndicated loan facility aimed at supporting the landmark project through senior and mezzanine debts.
“I have known Bob (Lowres) for many years and in the last two or three years, we have been having a lot of discussions and as the project evolved, we looked at a good structure in terms of how to fund it, debt versus equity, and BSP took on the lead role to put a syndication in place to fund the project,” Mr Ali said.
“It’s a huge project, more than $200m and Bob, with his experience, he has been able to put in the required equity. So as the lead bank in this syndication, we approached FNPF as well in terms of taking a stake in this development and we are very pleased that they are fully engaged now in the development.
“BSP and FNPF will provide some senior debt for the development and FNPF has also agreed to provide some mezzanine debt to continue to support this development.”
FNPF’s chief executive officer Viliame Vodonaivalu told The Fiji Times that the Fund is investing around $100million in the project.
“We have two arrangements: one is the equity holding, which is around 43per cent of the equity amount and we are a minor holder on the debt side,” he said.
Quantum leap
For both institutions, it’s a quantum leap into an area of project financing that neither has attempted before.
“This is the first investment of its kind for the Fund, combining debt and hybrid instruments, including a mezzanine debt facility and property ownership via strata titles,” Mr Vodonaivalu said.
FNPF has also acquired commercial areas within the resort, comprising a restaurant, rooftop bar, spa, conference facilities, and retail outlets, which will be owned through strata titles.
The commercial areas will cater to guests of the Radisson Blu-branded hotel and residents of the Naisoso community, creating an additional revenue stream for the Fund, according to a BSP statement issued last week.
For BSP, financing the Radisson Blu Mirage Resort project is going down in its history books as the first syndicated deal that it is doing with FNPF and according to Mr Ali, it is a financing collaboration that holds a lot of promise not just for project financing in Fiji but for unlocking potentials in Fiji’s economy.
“We were pleased to take the lead agent role to ensure that we structure the deal well, documentations all properly done, and set up a platform and a model that BSP can use and do further developments with funding support from FNPF, which is now the second biggest shareholder of BSP Bank.
“So we’re very happy to partner with FNPF and I’m sure this will not be the first.
“There are more to come in terms of more developments, not only in Bob’s investments but tourism generally, being the biggest driver of our GDP and also to support the country’s economic growth,” Mr Ali said.
Watershed moment
And for the seasoned real estate developer Bob Lowres, who is no stranger to Fiji and is credited with the development of Naisoso Island, the new BSP/FNPF syndication is definitely a watershed moment for project development in Fiji.
“Mr Ali made a very important point about how we now have a set of process in place whereby FNPF and BSP now have a formula where we can now look at projects similar to mine,” he said.
“And I think that’s really important because major projects in Fiji are very hard to fund normally.
“And I think that there’s a process we can work through now doing a lot more projects that would derisk it.
“Risk is the thing.
“We’ve already covered all of our debt with presales and we still have two years until completion.
“So it’s a very, very safe deal for FNPF and BSP to be involved in.”
Upon completion, the Radisson Blu Mirage Resort will feature 144 luxurious apartment units for individual ownership, of which approximately 80 percent have already been pre-sold, according to BSP’s statement.
“The development will include commercial areas and promises five-star amenities, including a restaurant, rooftop bar, spa, conference facilities, and retail outlets to provide world-class accommodations for guests,” it added.
