Casino resort projects delayed - Celebration needs land, Harmony Cove financing appears unresolved
Celebration Jamaica Development Limited has applied to the Ministry of Finance and Public Service for an extension of the provisional order for the construction of hotel rooms for its integrated casino resort in Montego Bay.
It has not yet secured the land for the site, but Celebration Jamaica's acting Chief Executive Officer Markus Deutsch and the Urban Development Corporation (UDC), from which they are seeking to acquire the property, confirmed that there were ongoing discussions to secure the land.
The gazetted Casino Gaming Order for the Celebration Jamaica project identifies the site as being part of Success Estate, now known as Northern Estates.
Celebration Jamaica was to begin construction of the integrated resort over a month ago on May 15 in compliance with the provisional order from the finance ministry.
The ministry confirmed via email that Celebration is effectively in breach, but has signalled it is willing to be flexible.
"A developer which has not begun construction in line with the order is in breach of such. However, the ministry has received requests from the developers for extension of construction dates and is currently reviewing with a view to amend the orders."
Celebration is one of two candidates that were approved to develop casino resorts. The second, Harmony Cove Limited, a company partly owned by the Jamaican Government through Harmonisation Limited, also appears set to breach its provisional order. The project ought to have broken ground by July, but a market filing in the United States by the finance ministry suggests that the project won't get underway before the second quarter of 2017.
Several attempts at an update from Harmonisation Executive Director Dr Lorna Simmonds were unfruitful.
Celebration's Deutsch says his company expects to start construction in January 2017, subject to approval of permits by the National Environment and Planning Agency and the St James Parish Council.
"Unfortunately, we have not been able to get construction under way in the original time frame hoped, as the process required for final licensing and to secure the site location has been protracted," he said.
"We have been navigating the required licensing approval process and negotiations for the acquisition of the designated land to be able to ultimately begin the development and construction process."
Jamaica, for the first time, is seeking to issue casino licences. In 2010, having overcome years-long objections from mainly the Church, the underlying legislation to develop a casino market was passed.
The regulations were promulgated much later in 2015.
The law allows for no more than three licences to be issued. The process requires an approved casino resort developer - so far two investors have been selected - to build 2,000 or more hotel rooms alongside other amenities.
In the first round, approved developers must build at least 1,000 hotel rooms. UDC is willing to facilitate projects by selling land to investors without property.
Celebration Jamaica's phase one development is estimated at US$500 million.
"At the end of last month we received the second stage of required licensing approvals and are now preparing for the final and most arduous stage," said Deutsch. "We believe also that the land negotiations are nearing a successful outcome."
Only after construction of the first 1,000 rooms is the integrated resort candidate qualified to apply for a casino licence from the Casino Gaming Commission.
The casinos are expected to be built in the second phase.
Deutsch said financing for Celebration's project has been secured for some time, although he did not disclose the backers.
"Equity and debt financing has been identified and will be accessed in phases once the licensing approvals are in hand," the acting CEO said.
Celebration has partnered with Celebration Casino Corp of Canada to develop the casino for the resort complex conceived nine years ago by businessman and developer Robert Trotta. Alongside the hotels, the complex will eventually feature a casino, music studio, a theatre capable of seating 1,200 persons, as well as a banquet hall.
Harmony Cove has been on the drawing board even longer, with Harmonisation signing a private joint venture partner, Tavistock Group, in September 2006.
The final granting of approved integrated resort development orders will depend on the performance of the companies in meeting the provisional requirements.
Jamaica is still negotiating with Chinese backers for financing to launch Harmony Cove project. New market filings this week by the finance ministry estimated the phase one Harmony Cover project at US$898 million. That figure varies from the US$1 billion quoted by Simmonds in January.
Tavistock currently has a 51 per cent stake in Harmony Cove, while Harmonisation holds 49 per cent, but the ownership structure might change depending on the financing deals struck with the Chinese.
The Harmony Cove integrated resort will eventually span 2,300 acres in Trelawny, featuring hotels, a casino, golf courses, a luxury spa, marina facilities, convention and entertainment centres, and hotels. The first phase is projected to last three years, and the full project 10 years.