Estimated lease value of Tinian port property at $7.3M in 15 years
Bridge Investment Group LLC—the company that plans to build a $130 million-plus multimillion resort on Tinian—denies what it describes as a wrong perception of some people that it got a “sweetheart deal” from the government.
BIG executive director Phillip Mendiola-Long said yesterday that what the company and the Commonwealth Ports Authority reached on the Tinian harbor lease is a “fair deal” that would greatly benefit the ports agency in the long term.
It was in March this year when CPA board approved a conditional agreement with BIG. The company leased 439,200 square feet on Tinian for .30 cents per square foot.
As part of the agreement, BIG is required to develop a number of things for the ports authority. One of that is replacing the agency’s dilapidated warehouses in the harbor.
“Part of the conditions to our lease with CPA require Bridge Investment Group to fund, design, and build two new stevedore warehouses. These new warehouses will replace the currently dilapidated structures that are falling apart at the Tinian Port. New warehouses, I might add, that are financed, designed and built at Bridge Investment Group’s cost and will generate increased revenue for CPA and increase the asset bottom line of CPA in their financial statements,” stated Mendiola-Long in an email.
He estimates the cost of these two warehouses alone at over $375,000—at no cost to CPA.
He disclosed that BIG is also required to build a new Customs, Immigration and Quarantine Office building, which also houses the port incinerator and CPA Port offices.
Additionally, it is required to reconstruct a Brown Tree Snake Containment Area for CPA. Mendiola-Long revealed that this building, containment area, and the new incinerator is estimated to cost BIG another $275,000 in development cost.
According to Mendiola-Long, with the inclusion of all these, the total base payment for the lease with CPA is $781,760—not the $131,760 that was earlier reported. This would put the base price per square foot at $1.78 per square meter, not 2 cents, he said.
“Emphasis should also be placed on the fact that the $1.78 per square foot is only the base lease rate for the property and must be paid in full (in cash and construction assets) prior to any project construction,” according to him.
It should also be noted, he said, that BIG will be unable to build its project or even clear the property until the cash payment is made to CPA and new $650,000 in assets for CPA are constructed.
“This provides CPA a guaranteed payment upfront in cash and a guaranteed construction of much needed CPA assets on Tinian before we even begin construction,” he added.
CPA also requires the company to guarantee an additional lease payment in the form of a 1 percent surcharge on business gross revenue after the property is operational.
“Conservatively, after operations, this translates into an additional $30,000 to $40,000 per month lease fee that CPA will be receiving, which brings the total estimated lease value of the Tinian port property of $7,278,160.00 or $16.57 per square foot for a 15-year lease,” added Mendiola-Long.
Based on these information and conservative estimates on the 1 percent gross revenue fees that CPA will be receiving, “we feel that the value of the property on Tinian at approximately $16 per square foot is valued properly (roughly $1.10 per square foot per year).”
Mendiola-Long said those who have questions about the project or want to educate themselves on the positive impacts of the BIG project need only contact CPA or his office.
“It seems irresponsible for members of the Legislature or others to make accusations or comments that are either not well researched or blatantly and maliciously false. We again encourage those with questions to work with us in developing the entire CNMI instead of seeking to destroy investor confidence on one particular island over another. A simple phone call could’ve avoided a lot of misunderstanding and/or corrected and contradicted ill advice advocated by others with ulterior motives,” he said.
BIG, he said, is committed to the development of an interisland ferry service and committed to developing CPA’s Tinian Port to the benefit of all residents of the CNMI.
BIG’s “Tinian Ocean View Resort” will be Asia’s first Titanic-themed hotel and resort. Construction is eyed in December this year on Tinian. The proposed 300 hotel rooms will include a presidential suite, 15 suites, and 58 executive suites. The facility will also include a casino and banquet room, among other amenities.