The National Insurance Board (NIB) will list for sale next month the property that used to house fine dining restaurants Apsara, Tamnak Thai and the Siam nightclub, located at 13 Queen’s Park East, Port of Spain.
The property is valued at $20.2 million on NIB’s books. Last Thursday, NIB published a newspaper advertisement in which it made a Request for Proposals for the “provision of services related to the proposed sale of six parcels of land” for the NIB.
The Sunday Express understands that the most recent valuation of the Queen’s Park East property was done in 2021 by Linden Scott and Associates.
Last year, the NIB took possession of the property as the owner and landlord, which it had controversially acquired, after the lessor R&M Property Holdings failed repeatedly to meet its rental obligations.
The property has now been vacant for 14 months.
At the time, the NIB’s Investment Committee recommended that the property be sold. This was delayed as the board at the time wanted to explore its options with regard to the property.
However, after the term of the last board expired and with delays in installing a new board, the resolution on what the NIB would do with the property never materialised.
The property, which houses the restaurants and nightclub, is located metres away from the NIB’s head offices around the Savannah.
The Sunday Express was told that in the valuation done on the property, that the structures on the property held little value. The property’s attraction is its location.
The lease was between NIB and R&M, which is owned by Sharif Mohammed and Marie Kavanagh.
R&M had failed to pay 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 Apsara and Tamnak Thai restaurants announced that they would be closed temporarily, “due to unforeseen circumstances” and indicated that the restaurants “will reopen soon”.
On March 8, attorneys for R&M offered to make a payment of $4,021,996.44 to settle the indebtedness.
That sum comprised:
• $1,687,500, which represents rental arrears on 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 rental 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 NIB received in December 2020 from Justice Frank Seepersad, following a claim brought by the Board in 2018 for rental arrears.
In the March 8 letter, R&M requested of NIB that it be permitted to re-enter the property, on payment of the $4,021996.44, and on terms contained in the original lease, so that operation of the business could resume.
The NIB rejected that offer.
The Apsara restaurant re-opened at MovieTowne last year.
Questions over purchase
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 2014, the NIB paid $37 million for the buildings—$32 million for the property and $5 million for renovation.
The NIB then entered into a ten-year lease back arrangement with the owners of R&M Ltd.
For the first four years, the tenant R&M would pay the NIB a monthly rental of $96,000 and $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 applied.
R&M has complained to the NIB that they were 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 car park space from its adjacent offices at $29,000 a month but the company refused as it would have raised the monthly rent of the restaurants to $154,000.
Mohamed, who had occupied the premises for 20 years before, said he purchased the property, which is about 19,000 square feet, at 13 Queen’s Park East from CIBC for $1.9 million in 1991.
The audit conducted by the Ministry of Finance’s Central Audit Committee on May 10, 2017 noted that the NIB did not do a valuation of 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, on January 7, 2014, the NIB commissioned its own valuation by Linden Scott & Associates, which 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 wheras 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’s 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”.
The NIB did not respond to queries from the Sunday Express.