Kingston Properties to shift investment portfolio to include ‘greenfield projects’

Despite the pandemic, 2020 was a good year for the company

Jamaican real estate investment outfit Kingston Properties is shifting its investment portfolio to include ‘greenfield’ or ground-up projects.

Kevin Richards, chief executive officer of Kingston Properties, who made the disclosure to shareholders attending the company’s annual general meeting yesterday (July 14), pointed out that Kingston Properties always wanted to do ground-up development but was awaiting the right partners.

He explained that the first movement towards that goal was the purchase of the property on 7 Dumfries Road in New Kingston in the first quarter of 2021.

Richards advised that “the shift would change Kingston Properties investment portfolio to 65 per cent value-added (currently 43 per cent), 20 per cent core/stabilised (currently 57 per cent) and 15 per cent opportunistic/Greenfield projects (currently 0 per cent).”

He remarked that, “going forward we are making a slight shift to Opportunistic/ Greenfield projects”.

Despite the pandemic, 2020 was a good year for the company. At the end of 2020, Kingston Properties gross rental income amounted to US$2.13 million, square feet owned amounted to 282,348, 17 properties owned, with 86 per cent occupancy and a dividend yield of 2.10 per cent over a five-year period.

Retaining tenants during the pandemic while competitors were losing

“Fortunately, while many property owners were losing tenants, our main concern was retaining tenants,” the Kingston Properties CEO contended.

The company recorded an operating profit of over US$1.4 million with a net profit amounting to US$612,725.

The value of investment property jumped by US$14.2 million to US$38.19 million with additions to investment property totaling US$15.6 million. Total Assets saw a net gain of US$5.6 million to US$45.6 million.

Kingston Properties currently has real estate assets in Jamaica, United States, and the Cayman Islands. The CEO noted, “the property portfolio has been growing 2 ½ times over the last five years. Investment properties were valued at US$15.03 million in 2016 and grew to US$38.13 million in 2020. Jamaica holds 48% of the properties held while the Cayman Islands and the US hold 42% and 10%, respectively.”

It was further mentioned that the largest properties are, The Harbour Centre located in the Cayman Island, Red Hills Road Commercial Complex, and the Grenada Crescent office Building both located in Jamaica.

Property occupancy in 2020

As at the end of 2020, Kingston Properties property occupancy was 51% from Jamaica, 41% from the Cayman Islands, and 8% from the USA. Of the total occupancy, 4% is retail, 10% residential, 36% warehouse & industry and 50% are offices, with the largest income earned from office space of $19.67 million, followed by warehouse and industry earning $14.19 million.

According to Richards, “we are 100% occupied in all of the properties in every jurisdiction and I believe that is a great achievement. Also, collections have been good in all jurisdictions.”

Richards argued that the performance of the company is highly dependent on macroeconomics factors, predicting that the USA and Cayman Islands are likely to recover faster than Jamaica, therefore investment focus will shift to those jurisdictions

For his part, Kingston Properties Chairman Garfield Sinclair explained how the company has been operating throughout the pandemic.

According to Sinclair, “the pandemic was a defining moment for the world and the Group had to reorder its priorities”.

Among its key moves, he noted: “First, was to ensure the safety of our team and tenants.

“Second, we moved expeditiously to ensure resilience by boosting cash resources. Also, benefits from the APO were used to sustain the business, develop properties and cash was also retained to increase liquidity.

“Towards the end of the year, we were able to cautiously embark on projects and made two acquisitions.”

The chairman then went on to the key highlights of 2020, which included the disposal of six units from the South Florida condo portfolio to transition into higher yielding properties in the Cayman Islands and Jamaica, the acquisition of a fully tenanted office building in the Cayman Islands as well as an approximately 88,000 square foot of warehouse complex in Kingston, Jamaica.

In addition Kingston Properties reduced overall cost of borrowing to less than four per cent per annum, stock price improved almost 10 per cent in 2020, paid out 66 per cent of net profits as dividends and bought-back 50,000 stock units to give back to shareholders.

Lastly, Sinclair highlighted the company’s main strategic imperatives he identified, “as part of Kingston Properties’ resilience, growth strategy and cognisance of the market currents that confront the company”.

He listed some of the key priorities over the next 12 months, such as:

  • Capital growth
  • Geographic assets portfolio diversification
  • Leveraging strategic partnerships for growth
  • Executing on our digital roadmap

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Source: Our Today