Apsara and Tamnak Thai

SALE DEFERRED: The controversial property at Queen’s Park East, Port of Spain, owned by the National Insurance Board, that once housed the Apsara and Tamnak Thai restaurants and the Siam nightclub. The NIB took possession of the property in March this year, following a dispute over the payment of the lease rental.

THE management of the National Insurance Board (NIB) has recommended that the property which housed fine dining restaurants Apsara, Tamnak Thai and the Siam nightclub, located on the eastern side of the Queen’s Park Savannah, Port of Spain, be sold.

But the board of the NIB, chaired by former independent senator Helen Drayton, is against selling the property at this time.

Instead, sources close to the matter told the Sunday Express, after reviewing the management’s recommendation, the board directed that the sale be deferred.

The board also requested that management get a valuation for the property as part of the NIB’s financial audit.

Furthermore, the board directed that, pending the valuation, the institution’s investment committee consider various options for getting value for the NIB property—including the possibility of leasing it.

On March 3, 2021, the NIB took possession of the property at 13 Queen’s Park East, Port of Spain, as the owner and landlord, after the lessor R&M Property Holdings, failed repeatedly to meet its rental obligations.

The NIB’s investment—the building housing the restaurants and night-club—is located on Cadiz Road in Belmont, next to NIB’s corporate headquarters.

The lease is between NIB and R&M, which is owned by Sharif Mohammed and Marie Kavanagh.

A few days later, on March 6, the Facebook page of Apsara and Tamnak Thai restaurants announced that they would be closed temporarily, “due to unforeseen circumstances” and indicated that the restaurants “will reopen soon”.

In the meantime, the NIB has secured the property.

Sources close to the matter said the board has requested a report on the property’s maintenance and security pending a decision on what to do with it.

The Sunday Express was told that the NIB is unlikely to collect outstanding rent owed to it over the years and the decision by the company’s management team was to square off the loss on the social insurance provider’s investment in the property.

The acquisition of the property by the NIB in 2014 was subject to an audit by the Central Audit Unit of the Ministry of Finance, which determined that the NIB did not get value for money.

In October 2013, the NIB paid $37 million for the property, including the buildings. Of that $37 million, $5 million was to renovate the buildings.

The NIB then entered into a ten-year lease back arrangement with the owners of R&M Ltd.

As part of the lease agreement, for the first four years, the lessor R&M would pay the NIB a monthly rental of $96,000, with the monthly payment escalating to $125,000 for the remaining six years.

After ten years, R&M had the option to repurchase the property.

By April 2018, the rent increase was applicable.

R&M complained to the NIB that it was unable to pay the new rent because of challenges the business faced with inadequate parking.

The NIB had made an offer to R&M to rent it car parking space on the adjacent NIB property at $29,000 a month. The restaurant company refused as that would have raised the monthly rent to $154,000.

Property Valuation

The 2017 audit conducted by the Ministry of Finance’s Central Audit Committee on May 10, 2017, noted that the NIB did not do a valuation on the property, for which it spent $37 million.

Instead, at the time the company relied on two valuations submitted by R&M which had the property priced at $32 million. Four months after the sale was executed, the NIB commissioned its own valuation by Linden Scott & Associates on January 7, 2014. That valuation placed the open market value of the property at $16.5 million.

“The valuator placed no value on the buildings, stating that the buildings on the property were over 60 years old and had outlived their useful economic lives,” the audit revealed.

Furthermore, the NIB paid a premium price of $2,014 per square foot for the Queen’s Park East property, a rate higher than other properties bought around the Savannah at that time.

“A comparison of properties sold in and around the environs of 13 Queen’s Park East showed that the prices of three properties with buildings, which were demolished, ranged between $879 and $1,310 per square foot. It was also noted that a vacant piece of land that had special interest to the buyer, was sold at a premium price of $1,534 per square foot, whereas in 2010 NIB itself purchased a vacant parcel of land, at 19 Queen’s Park East at $1,004 per square foot. Based on the price paid, and excluding the buildings on the property, it meant the NIB would have paid $2,014 per square foot for the land at 13 Queen’s Park East,” the report said.

The Audit concluded that based on the documents reviewed and the events leading up to the NIB investment committee agreeing to the counter proposal, “it appeared that the NIB did not conduct a proper due diligence exercise prior to entering into this purchase and lease-back agreement.

“It also appeared that NIB was either unaware or failed to acknowledge the negotiating strength it possessed at the time,” it said.

“Going forward, it is recorded that whenever monies from the National Insurance (NI) Fund are to be invested, for whatever reason, that NIB carry out proper due diligence exercises, as a necessity, before entering into any agreement. It is also recorded that the NIB needs to be more vigilant in identifying when it is in a position of negotiating strength and make every effort to exercise such strength to ensure that the best value for money is attained in such a situation,” the audit said.

The auditors expressed concern that in “the event that R&M does not exercise the options to repurchase the property, which is very likely if it is unfavourable to R&M Ltd, then according to Linden Scott & Associates Ltd, the buildings would have no value, not even to NIB.”

History of the transaction

The property’s sale was first proposed to the NIB in June 2012 by Claude Musaib-Ali, the former CEO of CLICO, who acted on behalf of R&M Ltd.

The proposed sale and lease-back of the property was rejected by the NIB’s investment committee on November 21, 2012.

In January 2013, Musaib-Ali again approached the NIB to reconsider its decision to reject the proposal.

The investment committee approved a counter proposal, this time under the guidance of former finance minister Selby Wilson, on behalf of R&M Ltd.

The sale was concluded on October 9, 2013.

The NIB’s decision was based on:

• Projected internal rates of return of 9.1 per cent and 8.94 per cent after five years and ten years;

•The likely appreciation of the open market value of the property to around $51.89 million and $72.78 million after five and ten years, respectively;

•There were few comparable investments available locally;

•NIB had over $3.7 billion in cash, earning interest on average of just 0.15 per cent per annum; and

•That the property was of strategic value due to its close proximity to NIB’s newly-opened corporate headquarters.

The Audit concluded that based on the documents reviewed and the events leading up to the NIB investment committee agreeing to the counter proposal, “it appeared that the NIB did not conduct a proper due diligence exercise prior to entering into this purchase and lease-back agreement”.

“It also appeared that NIB was either unaware or failed to acknowledge the negotiating strength it possessed at the time,” it said.

The Central Audit based its finding on the following:

•The fact that the agreement resulted from an unsolicited proposal from a representative of R&M Ltd, which was rejected;

•The property was advertised for sale by the Mortgagee (Republic Bank Ltd) on October 16, 2012 edition of the Newsday;

•Approximately three months after initially rejecting the proposal, the investment committee agreed that Management should develop a counter proposal;

•The fact that NIB did not commission an independent valuation of the property prior to making the decision to enter into the purchase and lease-back agreement; and

•The acceptance by NIB of the proposals presented by R&M, including the monthly rental values rather than the monthly rental value recommended by BCQS, one of the valuators commissioned by the company.


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