The Social Security Board is undertaking a project that will see the construction of two office buildings on Chetumal Street. But what's raising eyebrows is that they are proposing to lend up to 20.4 million dollars to a Special Purpose Vehicle, a public private partnership known as Public Administration Campus I Limited.
On top of that, they'll be investing another 7.9 million in the SPV, and enter into a public private partnership with GOB, where it will be leasing the buildings for 30 years, before transferring ownership to the government.
The buildings will be five story, climate resilient and energy efficient, and will be adjacent to the Eleanor Hall Building. SSB is working with PPF Capital Limited to get this venture off the ground and today, the managing director told us more about the project.
Chris Magan, Managing Director, PPF Capital Belize Limited
"It's a public private partner initiative where the government is trying to get public infrastructure and working with the private sector to finance and execute the projects. In this case, it's for additional government buildings to be used for office space and as we mentioned, the plan is to build two buildings, 120,000 square feet in total adjacent to the Eleanor Hall Building off Chetumal Street in Belize City."
"We had done the initial feasibility study to look at kinda modeling what the cost and revenue streams may look like for this project and to sort of pitch to potential debt and equity investors, there's two equity investors, one is government of Belize and the other equity investor is Belize Social Security Board."
"It's a BOLT, so it's build-own-lease-transfer so the company, Public Administration Campus Limited will be responsible to run a procurement and project management to get a firm or group of firms to actually execute the construction of the building. We're estimating after we finish the procurement process that it will take somewhere around 27 months, so the analysis that the board will be responsible for is to see whether or not we believe the bids that we receive are credible to get it down within the suggested time frame. It's a long term investment which kind of matches some of the structural portfolio needs of the SSB, we expect the debt repayment to be finished in about 20 years and the PPP arrangement to be finished in 30 years and thereafter…"
"We expect that the building will be transferred so that last part of build, own, lease, so the company will collect the lease payments and then pay creditors and dividends to the equity holders and then transfer to the government of Belize a public asset at the end of the 30 year period."
And if this investment method seems different, it's because SSB is looking for more ways to invest. According to the CEO, this is so they don't have to go back to contributors. She explained it to us today.
Deborah Ruiz, CEO, SSB
"In terms of the direction of Social Security, as you know in our banking system, Social Security has an influx of cash, we're very liquid, so we're looking for viable investments that we can put our money to best use so that we don't have to go back to contributors. That has been our ethos in terms of our investment portfolio. We have looked at a PPP before, unfortunately, due to public concerns and even at our board at the time, the PPP in terms of the National Gas Company, that did not go through. This is a proposal that is now for us in terms of the government wanting new facilities to house their staff. You know, they're renting all over the place and trying to consolidate at a fixed price. Now when Mr Magan presented the numbers, we are talking about a viable project, yes Social Security said, if we're going to do this, we need to be in control, so in terms of the majority, it is Social Security who would have the majority seats as the equity partner in the company."
"The entire project, as we said, is over $54 million and Social Security is not putting up all that money, we are putting in as the equity partner and putting in a percentage in terms of the first building so the company then has to raise by putting it out to other public investors who would want to join and benefit from this. What we like about the project is that we are guaranteed 100% rental of the building from the government initially at 4% and Mr Magan mentioned we have 100,000 of rentable space, that's monthly, and you multiply, you can do the numbers in terms of the return on investment."
