Higher rental income, unit sales lift profit for Kingston Properties

DESPITE foreign exchange pressures, higher financing costs and administrative expenses, Kingston Properties Limited (KPREIT) reported profit after tax in the second quarter of 2022 totalling US$367,924 compared to US$302,703 for the second quarter of 2021, representing an increase of 21.5 per cent.

For the six-month period ended June 30, profit increased by 16.9 per cent to US$1.1 million, compared to US$927,202.

The company indicates that it will continue to raise funds on the market as it adjusts its portfolio into more profitable segments. These include “value-added opportunities” says CEO Kevin Richards who defines this as “opportunities that are below their full potential, usually tenanted at rent less than the market average, or in need of renovations to attract higher rent”.

“The two most significant matters in the second quarter were, one, completing our equity fund-raising via an APO — which was successful and oversubscribed — and two, addressing rising interest rates so we negotiated fixed rate terms on some of our facilities and paid out one,” Richards told the Jamaica Observer.

New acquisitions are in the pipeline while divestments continue.

In the reporting period the company disposed of a unit at West Fort Lauderdale and at Opera Tower in Miami and reported a gain of US$225,794.

“Favourable signs of recovery, including jobs growth in the US and the elimination of travel restrictions globally, have left us cautiously optimistic about our ability to maintain our current growth trajectory,” the CEO said in a statement attached to the company’s latest financials.

Richards said that the company will continue the divestment of the condo portfolio in Florida as it shifts to multi-family properties “to reduce valuation volatility and generate higher yields”.

“The last two condos in our portfolio held in South Florida are on the market for sale, along with expressions of interest received on certain properties in Jamaica. I would not want to discuss further until deals are closed,” he told the Business Observer.

“We have an acquisition in the Cayman Islands, that is pending receipt of certain approvals, which we hope to close before the end of the third quarter, and we continue to assess other deals in light of the current global economic environment,” he said.

Rentals improve

Richards noted that the group achieved near 100 per cent occupancy by the end of the reporting period and continues to benefit from a tenant base comprised primarily of financial, warehousing and logistics, manufacturing, and government service providers.

Group rental income increased by 12.5 per cent year on year, for the three months ended June 30, 2022, to US$818,526 compared to US$727,420 for the same period in 2021. There were increases in rent at some properties and higher occupancy levels at properties in Jamaica.

For the first six months of the financial year, group rental income increased by 12.5 per cent to US$81.6 million. Direct property and administrative expenses increased by 37.0 per cent during the second quarter from US$299,785 in 2021 to US$$410,783 in 2022.

For the half-year, the increase was 28.2 per cent — US$733,056 due mainly to higher staff costs linked to an increase in staff complement and higher broker and professional fees, which were both one-off expenses recorded during the period. Read more

Source: Jamaica Observer