Pan-Jam projecting $6.5b spend on Oceana redevelopment
Pan-Jamaican Investment Trust and its Canadian partner is shelling out an initial $1.5 billion primarily to ready the first floor of their newly acquired Oceana property on the Kingston waterfront, space which has already been leased to the Accountant General's Department.
It is estimated that the full cost of the redevelopment project for Oceana will top $6 billion, according to figures outlined by Pan-Jam's chief operating officer, Paul Hanworth.
The lease to the accountant general is officially in effect, but disclosures in Parliament last week indicate that the Government is looking to spend around $400 million to fit the space to the needs of the government agency before it moves in.
"The lease in theory started this month (May), but we've had some challenges sourcing some equipment. I know the Government had some challenges in getting people in to do their piece of the work, so I would be hopeful that it is another month," said Hanworth.
Pan-Jam and partner Downing Street acquired Oceana Hotel from the Urban Development Corporation for $385 million in early 2014 and are redeveloping the property through Kingchurch Property Holdings Limited.
The redevelopment is being approached in phases so that the property can start generating income early in the project cycle.
"One of the thoughts was 'Let's do this in phases', and so we deliberately staged the first phase with the lease to the Government so that we can have a little bit of income coming in while we sorted out properly the remainder of the building," Hanworth said.
Hanworth reported to Pan-Jam's annual general meeting on Thursday that $337 million was spent up to December 2015 to
clean and renovate the 12-story building, another $1.153 billion is projected for the first phase, and phase two is costed at $5 billion - for total construction outlay just shy of $6.5 billion. The overall investment rises to nearly $7 billion when the acquisition cost of the hotel is included.
However, the estimate for the renovation project might change depending on the design that Pan-Jam and Downing Street finally settle on for the complex. Hanworth said that the near $7 billion outlay is what the partners are committed to for now.
"We've completed some preliminary designs and we've engaged some specialist consultants to really help us decide what we want to do with this property," he told Sunday Business.
"The feasibility study will tell us what the guest profile is and who is coming to stay there; what is the product offering that we want: Is it hotel, is it going to be condos, will it be retail, will it be office, or what sort of combination of those elements will we want to be constructing."
Hanworth said the acquisition and renovation of the Oceana complex is a sign that "Pan-Jam is committed to all of Jamaica, including downtown", and that in making the move to invest there "Pan-Jam and Downing Street have put considerable dollars at risk in downtown Kingston".
The current minister of finance, Audley Shaw, was critical of the sale deal for Oceana as a potential case of fiscal irresponsibility, saying the cost to one Government agency to retrofit one floor for occupancy was more than the investors paid to buy the hotel from another government agency.
Shaw, at the closing of the Budget Debate last week, also revealed that the accountant general will initially pay $1,774 per square foot to lease 51,253 square feet of office space at Oceana, but that annual rate increases of 7.5 per cent are baked in over the 10-year lease.
Hanworth says Oceana "will be a catalyst for the full redevelopment of downtown"; that the property, once redeveloped, would have a transformative effect on life and business.
"This is not a tourist destination by itself I see this as business travel, I see this as tourism, and I see this as a place for Jamaicans to go and enjoy, and this is what we need for downtown," he said. "I'm confident that if we get it right, it will be a good investment for Pan-Jam. It will be a good investment for Downing Street, and it will be a good investment for Jamaica."