On May 20, 2021 the principal and developer of Kimpton Kawana Bay – Warren Newfield – abruptly resigned from his position as Ambassador-At-Large and Grenadian General Consul in Florida. Additionally, the resignation was tendered in such manner as would antagonize the Prime Minister of Grenada. Also, new revelations have given investors good cause to suspect the Kimpton Kawana Bay project is no longer a going concern.
The Investment Risk in Caribbean CBI Properties
In theory, investing in CBI real estate allows investors to sell the investment after the requisite holding period. Therefore, investors can recoup their investment while retaining citizenship in perpetuity.
However, most Caribbean CBI projects – including Kimpton Kawana Bay – require the full investment amount to be submitted during the construction phase. As a result, the established integrity of the developer is the first and foremost consideration. Otherwise, a hasty investment decision can leave an investor owning a unit in a Caribbean resort that was never completed.
This ham-fisted resignation and risk exposure brought about by Mr. Newfield raise serious questions regarding the stability of the Kimpton Kawana Bay project. Should investors in Kimpton Kawana Bay have seen this coming? The answer is unequivocally – yes.
Who is the Kimpton Kawana Bay Project Developer?
Due diligence into the project would reveal the developer is “True Blue Development Limited a division of Tau Capital”. Additionally, they claim to have a “track record of building projects successfully”. What projects are these? They only reference one uncompleted development which is the case in point – Kimpton Kawana Bay.
Furthermore, the parent company of the developer Tau Capital – describes themselves as a “real estate and mining development company”. However, they only list two real estate projects, one being Kimpton Kawana Bay and the other is a “proposed” project on Sint Maarten. However, neither of these projects have been completed. Additionally, the Sint Maarten project is merely a proposal.
On the other hand, they seem to have extensive mining experience developing coal and platinum mines in South Africa and Botswana. They also have a history of digging for metals in the US and farm fertilizer in Brazil. These guys are not real estate developers, they are miners!
Obviously, successfully developing a CBI real estate project in the Caribbean is not remotely similar to a mining project. It would be an understatement to say we are comparing apples to oranges. As a result, the Kimpton Kawana Bay developer had no credible track record for investors to judge by.
It is therefore misleading to describe themselves as experienced real estate developers with a successful “track record”. This risk was hidden in plain sight and should come as no surprise to a competent investor who did the requisite due diligence.
Ease of Doing Business in Caribbean Countries
One of the reasons that Mr. Newfield gives for his abrupt resignation is Grenada’s low score on the World Bank’s “Ease of Doing Business” rankings.
However, Grenada’s ranking on the World Bank’s list should come as no surprise. All of the Caribbean CBI countries have a low to mid range score on the World Bank’s ease of doing business index. Indeed, so do the countries that Tau Capital conducted mining operations in e.g. Botswana, South Africa, Brazil.
Additionally, there is no change from year to year when comparing 2019 to 2020. It begs the question, did Mr. Newfield examine the rankings before or after they started the project? I suspect it was the latter.
|Country||2019 Ranking||2020 Ranking|
|Antigua and Barbuda||113||113|
|St Kitts and Nevis||139||139|
The rankings on the World Bank index for Caribbean CBI countries belie the fact there are many successful CBI real estate developments. Indeed, these projects were completed by experienced real estate developers – not miners.
Breach of Fiduciary Duties to Investors
As principal and developer of the Kimpton Kawana Bay project, Mr. Newfield certainly owes investors a fiduciary duty. However, his publicly confessed lack of faith created instability in the Grenada CBI program and the Kimpton Kawana Bay project. Additionally, his hasty resignation then left investors to twist in the breeze.
If unsubstantiated, his allegations expose the project to a class action lawsuit instigated by investors. Plus, his abrupt resignation left investors exposed to avoidable risk. Additionally, Kimpton Kawana Bay may be exposed to a defamation lawsuit from the government of Grenada.
Most of all, misrepresenting the company as an experienced real estate developer is a huge liability. As a result, he was not representing the best interest of investors.
Kimpton Kawana Bay is Using Fuzzy Numbers
Although I have never been a promoter of this project, I have been a subscriber to their newsletter. The last newsletter I received was in February 2021 which provided a project update.
According to the February 2021 newsletter, Kimpton Kawana Bay had weathered the pandemic well and announced “over 80% of the units sold or reserved”. This number had increased from 74% which was announced in November 2020.
Two days ago, during an interview, Mr. Newfield claimed that units sold or reserved had actually increased to 92%. However, he then quickly backtracked and confessed that funding had only been received for 59% of the project. Indeed, the project is currently in need of an additional US$40 million.
What is the Future of the Kimpton Kawana Bay Project?
The renown US investor Warren Buffett has a saying – “Only when the tide goes out do you discover who has been swimming naked”. Due to the unfortunate affect of the global pandemic and its crushing effect on global travel, the tide has gone out in Grenada. Unfortunately, Kimpton Kawana Bay has been swimming naked and so have their unsuspecting CBI investors.
All metaphors aside, Kimpton Kawana Bay desperately needs US$40 million of additional investor funds or the project is bankrupt. Additionally, the public debacle Mr. Newfield created is a conspicuous red flag for any potential new investors.
Furthermore, it is doubtful investors who have reserved units but not yet committed their funds will follow through. They are more likely to switch to the Grenada Donation Option to qualify for citizenship or cancel their applications altogether. This will certainly exasperate the precarious financial situation of the project.
Unfortunately, without additional investor funds or an unforeseen bailout, the Kimpton Kawana Bay project is destined to become a developer’s graveyard sitting at the end of Grenada’s world famous Grand Anse Beach.