Kingston Properties to tap equities market again this year

Kingston Properties (KPREIT) is headed back to the equities market this year for additional funding for expansion.

In a letter to shareholders published on the Jamaica Stock Exchange on Tuesday, KPREIT CEO, Kevin Richards said the company is returning to the capital markets in 2021 to “take advantage of more attractive assets that meet our risk-adjusted return threshold.”

Richards said more focus is being placed warehousing rather than office space.

KPREIT last tapped the equities market in November 2019 when it raised $2 billion through a renounceable rights issue.

Richards said that the pandemic has shifted how companies operate.

“The global pandemic that ground the world’s economy to a standstill made entire industries almost obsolete and upended the way most companies have traditionally conducted business,” he noted.

“Working from home accelerated the adoption of digital remote platforms, while lockdowns significantly restricted movement and large gatherings. All of this has probably permanently transformed the need for large physical locations and how they will be deployed in the future.”

Richards stated, “The pandemic has created paradigm shifts in the way businesses operate and will continue to quicken the pace of advancements in digital and other remote interaction.”

To this end, he indicated, “We continue to believe that we can “future-proof” our operating model by focussing on warehousing and logistics assets.”

The CEO said KPREIT would be engaging in strategic partnerships to achieve core objectives of reaching $10 billion in equity and having 1,000,000 square feet of property under management or control by 2022.

He reported that the company, year-to-date, has experienced a 40 per cent improvement in rental revenue and greater efficiency from the deployment of the group’s cash resources demonstrated by Net Operating Income (NOI) and EBITDA increasing by 82 per cent and 67 per cent respectively.

“All of the attributes of a REIT are in our DNA, so we focussed on our ability to generate cash from operations, resulting in an 82 per cent year on year improvement in Funds From Operations (FFO),” Richards stated.

KPREIT, he said, has maintained solid occupancy levels in excess of 90 per cent throughout the year, as well as a similar level of collections during the period.

The company also acquired a fully tenanted office building in George Town, Cayman Islands and arranged financing for that acquisition in the midst of that jurisdiction’s lockdown.

Additionally, it acquired an 88,000 SF value-add industrial property in close proximity to the ports in Kingston Jamaica.

The CEO said that the company has also repriced the bulk of bank borrowings to rates from as low as two per cent per annum to just under four per cent per annum.

It has also reduced its Miami condo portfolio further allowing it to eliminate debt with bankers in the US and increase cash holdings for new property acquisitions or distribution to shareholders.

Richard said he remained confident that “global monetary policies will remain accommodative, which augurs well for the future stability of certain asset classes like real estate.”

Source: Loop Jamaica