One of the big names associated with Dubai’s Palm development is Kerzner International — the hotel and gaming group part-owned by South African magnate Sol Kerzner and Nakheel, the government-owned developer arm of Dubai World.
The group famously opened the gigantic Atlantis Dubai hotel at the peak of the crisis last year. The $20m launch party in November 2008 featured Kylie Minogue and fireworks that could be seen from space. Kerzner is currently in the process of developing the One & Only Royal Mirage Jumeria Beach — another Palm development — slated for completion in October 2010. A £600m planned extension of the Dubai Palm itself, meanwhile, is also still planned.
Given the above it’s interesting to note, via a SEC annual filing from Fidelity Central Investment Portfolios LLC on November 25, just how much loans extended to the un-rated Kerzner have dropped in value this year.
In fact, Eric Mollenhauer, portfolio manager of the Fidelity Floating Rate Central Fund singled out the Kerzner investments as among the fund’s key detractors:
Restrained by technicals within the loan market, an out-of-index position in Kerzner International fared poorly. The company owns, operates and has interests in high-end resorts all over the world. Given the loan’s strong collateral coverage, I continued to hold it at period end.
For example, the figures show how a 3.95975 per cent Kerzner term-loan coming due on September 1, 2013 for a principle amount of $28,156,497, is currently valued by Fidelity at $14,108,432.
As an aside, it’s worth noting Kerzner’s other flagship development, the Atlantis hotel on Paradise Island in the Bahamas (still booming back in March this year) is now also beginning to flounder as the Caribbean-island economies take a delayed punch from the global crisis.
Related links:
A ‘recession vacation’ in The Bahamas – FT
Atlantis, we have a problem – FT Alphaville
“For the general purposes of the Dubai Financial Support Fund…” - FT Alphaville
“The Sun Never Sets on Dubai World.” Really? – FT Alphaville
Dubai World asks for debt ‘standstill’ – FT