The National Insurance Board (NIB) will put the property that housed fine dining restaurants Apsara, Tamnak Thai and nightclub Siam, located at 13 Queen’s Park East, Port of Spain, up for sale next month.
The property is valued at $20.2 million on NIB’s books. Last Thursday, the NIB published a newspaper advertisement requesting proposals for the “provision of services in connection with the proposed sale of six plots of land” for the NIB.
The Sunday Express understands that the most recent valuation of the Queen’s Park East property was carried out in 2021 by Linden Scott and Associates.
Last year, the NIB took possession of the property as owner and lessor, which it acquired controversially, after lessor R&M Property Holdings repeatedly defaulted on its rental obligations.
The property has now been vacant for 14 months.
At the time, the NIB’s investment committee recommended the sale of the property. This was delayed as the council at the time wanted to explore its options with regard to ownership.
However, after the term of the last council expired and with delays in the installation of a new council, the resolution on what the NIB would do with the property never materialized.
The property, which houses the restaurants and the nightclub, is located a few meters from the headquarters of the NIB around the savannah.
The Sunday Express was told that in the valuation carried out on the property, the structures of the property were of little value. The attraction of the property is its location.
The lease was between NIB and R&M, which is owned by Sharif Mohammed and Marie Kavanagh.
R&M had not paid the NIB its monthly rent of $125,000 between July 2019 and March 2021.
On March 3, 2021, the NIB secured the property
A few days later, on March 6, the Facebook page of Thai restaurants Apsara and Tamnak announced that they would be temporarily closed, “due to unforeseen circumstances” and indicated that the restaurants would “reopen soon”.
On March 8, R&M’s attorneys offered to make a payment of $4,021,996.44 to settle the debt.
This amount included:
• $1,687,500 representing rent arrears at 13 Queen’s Park East from April 2020 to March 2021 (12 months at $125,000 per month plus VAT)
• $1,265,625, which represents rent arrears for the period July 2019 to March 2020 (nine months at $125,000 per month plus VAT)
• $1,068,496.44, representing an order that NIB received in December 2020 from Judge Frank Seepersad, following a claim filed by the Commission in 2018 for rent arrears.
In the March 8 letter, R&M asked NIB to be allowed to re-enter the property, upon payment of the sum of $4,021,996.44, and subject to the conditions contained in the original lease, so that the business operations can resume.
The NIB rejected this offer.
Apsara Restaurant reopened in MovieTowne last year.
The acquisition of the property by the NIB in 2014 was audited by the Central Audit Unit of the Ministry of Finance which determined that the NIB was not getting value for money.
In 2014, the NIB paid $37 million for the buildings, including $32 million for the property and $5 million for the renovation.
The NIB then entered into a ten-year sale-leaseback agreement with the owners of R&M Ltd.
For the first four years, the R&M tenant would pay the NIB monthly rent of $96,000 and $125,000 for the remaining six years.
After ten years, R&M had the option of buying back the property.
In April 2018, the rent increase was applied.
R&M complained to the NIB that they could not pay the new rent due to the company’s difficulties with inadequate parking.
The NIB had made an offer to R&M to rent a parking space in its adjacent offices for $29,000 a month, but the company declined because it would have raised the restaurants’ monthly rent to $154,000.
Mohamed, who had occupied the premises for 20 years prior, said he purchased the property, which measures around 19,000 square feet, at 13 Queen’s Park East from CIBC for $1.9 million in 1991.
The audit conducted by the Finance Ministry’s Central Audit Committee on May 10, 2017 noted that the NIB had not done an appraisal of the property, on which it had spent $37 million.
Instead, at the time, the company was relying on two appraisals submitted by R&M, which valued the property at $32 million.
Four months after the execution of the sale, on January 7, 2014, the NIB commissioned its own appraisal by Linden Scott & Associates, which placed the open market value of the property at $16.5 million.
“The assessor placed no value on the buildings, stating that the buildings on the property were over 60 years old and past their useful economic life,” the audit found.
Additionally, the NIB paid a markup price of $2,014 per square foot for the Queen’s Park East property, a higher rate than other properties purchased around the Savannah at that time.
A comparison of properties sold in and around 13 Queen’s Park East showed prices for 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 which was of particular interest to the buyer was sold at a premium of $1,534 per square foot when in 2010 the NIB itself bought a piece of vacant 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, this 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 that led the NIB’s investment committee to accept the counter-proposal, “it appeared that the NIB had failed to carry out due diligence reasonable before entering into this purchase and leaseback agreement.”
“It also appeared that NIB was either unaware of or did not recognize the bargaining strength it possessed at the time,” he said.
“Going forward, it is recorded that whenever funds from the National Insurance (NI) Fund need to be invested, for whatever reason, that NIB carry out appropriate due diligence exercises, as a necessity, before to conclude an agreement.
“It is also recorded that the NIB needs to be more vigilant in identifying when it is in a position of bargaining strength and strive to exercise that strength to ensure that best value for money is achieved in such a situation” , said the audit. said.
The auditors expressed their concern that “in the event that R&M does not exercise the options to buy back the property, which is very likely if this is unfavorable to R&M Ltd, then according to Linden Scott & Associates Ltd the buildings will not would have no value, not even to NIB”.
The NIB did not respond to questions from the Sunday Express.