Businessuite Markets
Sygnus Real Estate Finance To Consider First Dividend Payment In 2023, As J$3.70B 9-Storey One Belmont Commercial Tower Corporate Office Development Over 74% Completed.
Results of Operations
The Group continued to unlock value from its major real estate investment assets by achieving another set of key milestones, namely:
• advancing the J$3.70 billion Belmont Road 9-storey commercial tower to 74.0% completion and remaining on track for completion in mid-2023, with four of the five floors effectively leased with 10-year renewable agreements;
• advanced the construction of the built-to-suit industrial warehouse facility on Spanish Town Road to 87.0% completion;
• made submissions to various agencies to secure approvals for the beachfront hospitality investment property in Mammee Bay, St. Ann;
• continued to engage in partnership discussions and financing options with international investors and financiers with regards to Sepheus Holdings Limited, the SRF subsidiary which holds the Mammee Bay asset.
Subsequent to the end of the quarter, Sygnus Real Estate Finance Limited (SRF) began exiting its J$1.00 billion investment in a REIN as the third-party project achieved practical completion in October 2022, thus leading to the start of inflows from the sale of units.
SRF completed the purchase of 58 Lady Musgrave Road, Kingston 10, post Q1 Nov 2022, and thus now owns both 56 Lady Musgrave Road and 58 Lady Musgrave Road, which are adjacent to each other.
The Group may be able to consider its first dividend payment during the 2023 calendar year, subsequent to completing its first investment life cycle, after exiting and or completing a number of investments and developments during the course of the year.
The Group remains fully focused on executing its strategy of unlocking value in real estate assets, as it seeks to continue increasing shareholder value.
Total investment income or core revenues was J$21.3 million for 3 Month 2022, compared with a loss of J$4.4 million for the three months ended November 2021 (“3 Month 2021”). This result was primarily driven by higher net interest income from a larger portfolio of REINs, which offset larger interest expense driven by an increase in loans and borrowings and notes payable.
The weighted average fair value yield on REINs was 11.2% compared with 10.l% last year, while the weighted average cost of debt was 5.1% compared with 5.0% last year. Subsequent to the end of the quarter, SRF began exiting its J$1.0 billion investment in a REIN which achieved practical completion in October 2022, as the Group began to receive the sale proceeds for purchased units as buyers completed the financing for their purchases.
In addition to the interest charged by the REIN, SRF also receives a profit-sharing component.
There was no gain on investment property during the quarter as these assets are only valued once at the end of each financial year, with the last valuations occurring in August 2022.
Share of gain on joint ventures, which also captures SRF’s 70% ownership of the One Belmont development was immaterial during the quarter, as this development is only valued at the end of each financial year, with the last valuation occurring in August 2022.
Note, however, that One Belmont is scheduled to reach practical completion prior to the end of the current financial year, and as such, the revaluation of share of profit is likely to occur prior to the August 2023 year-end financial results. This revaluation may materially impact total investment income during the quarter in which it occurs. Note also, given One Belmont has already negotiated long term leases with tenants, to the extent where lease payments begin while SRF still maintains its share of the joint venture or a portion thereof, these lease flows may affect total investment income starting in the quarter during which this occurs.
SRF’s total investment income is typically comprised of all the activities that were involved in the unlocking of value from its portfolio of real estate investment assets, namely: interest income on its REINs and the commitment fees related to this activity; gain or loss on its property investments, namely, on its investment properties, or on any real estate assets that were exited; and share of gain or loss on its joint venture investments.
Based on the nature of its business model, SRF’s earnings during interim reporting quarters may experience “lumpiness” in total investment income and net profits, which is typically “smoothed out” at the end of each financial year, similar to what occurred in FYE Aug 2022 relative to the interim quarterly results.
The Group uses independent appraisers to value its investment assets annually. All investment properties are USD investment assets which are converted to JMD for financial reporting purposes. SRF’s key strategic assets are held via wholly owned subsidiaries or joint ventures.
Net investment income or core earnings was a loss of J$82.4 million vs a loss of J$87.4 million for 3 Month 2021, driven by the J$21.3 million outturn for total investment income which was offset by higher operating expenses of J$103.7 million versus J$83.0 million last year. For FYE August 2022 SRF generated J$983.6 million in net investment income.
Net loss attributable to shareholders was J$172.5 million compared with a net loss of J$99.9 million last year, driven by the negative net investment income of J$82.4 million, a fair value loss on financial instruments of J$23.4 million (3 Month 2021: gain of J$10.9 million) and a net foreign exchange loss of J$66.7 million (3 Month 2021: loss of J$23.5 million). Note that SRF’s net profit may be materially impacted by the completion of the One Belmont development and by the final net proceeds from exiting investments in REINs, which are scheduled to occur prior to the end of the current financial year.
At the end of the current financial year, SRF’s net profit may also be materially impacted by changes in the valuation of its underlying real estate investment assets, as valuation for existing assets only occur once at the end of each financial year. Book value per share for Q1 Nov 2022 increased to J$22.71 compared with J$20.81 last year.
Note: the Group’s return on average equity (ROE) was 11.3% at FYE Aug 2022 with an average ROE of 30.6% over the past three audited financial years. For FYE August 2022, SRF generated J$693.0 million in net profit.
Basic earnings per share (EPS) was negative J$0.53 compared with negative J$0.36 last year, while diluted EPS was negative J$0.49 compared with negative J$0.30 last year. Similarly, basic core earnings or net investment income per share (NIIPS) negative J$0.25 compared with negative J$0.31 last year, while diluted NIIPS was negative J$0.24 compared with negative J$0.27 last year. For FYE August 2022, SRF generated basic and diluted earnings per share of J$2.20 and J$2.06 respectively.
One Belmont | Commercial Tower: The J$3.70 billion 9-storey corporate office development is currently 74% completed, with construction remaining on track for the target April/May 2023 completion date. The substructure is 100% completed with pouring of concrete for all floors completed and the roof remaining to be poured. A fourth long-term agreement-to-lease which should have been executed in December 2022 was rescheduled for execution in January 2023. This means that four of the five floors are effectively leased once this fourth agreement is completed. The intended tenants have begun the process to select and execute their respective interior designs to meet their respective needs.
For more information on Sygnus Real Estate Finance Limited
Unaudited Results for the 3 Months Ended November 30, 2022 CLICK HERE
Businessuite Markets
Barita Reporting Treasury, Trading And Brokerage And Investment Banking Business Lines As Largest Contributors FY24 Performance
Net profit after tax (“NPAT”) for Q4 FY24 increased by 200% to $999 million, bringing NPAT for FY 2024 to $3.9 billion, 14% ahead of 2023. The improvements achieved in Q4 FY24 reflected the effects of management’s strategy to influence improvements in operating revenue through a focus on active balance sheet management, revenue diversification and expense management, in particular the management of funding costs.
Revenue growth in Q4 FY24 was both robust and well-distributed, led by an exceptional performance in our Treasury, Trading and Brokerage business line, which accounted for 56% of total revenue. This improvement was supported by the continuation of the uptrend in net interest income which rose 3% to $164 million relative to the comparable quarter in financial year 2023.
Directionally, this performance aligned with expectations, buttressed by a pivotal shift in the monetary policy stance of the Bank of Jamaica and the US Federal Reserve, both of which reduced their benchmark policy rates by 25 and 50 basis points respectively, during the fourth quarter. While an additional 25 basis point cut was announced at the end of September, to come into effect at the beginning of October, the BOJ had communicated a shift in its policy posture during Q3 FY24, to which the market began to react via the downward repricing of liabilities, by extension, benefitting our Net interest income. The balance of risks points towards continued improvement in our net interest income as our interest-bearing liabilities reprice with a more frequent cadence.
The macroeconomic landscape has also evolved favourably. Domestic inflation has moderated, now averaging within the BoJ’s target range for the last 6 months, and a similar moderation has taken hold in the U.S.A., even as the Federal Reserve continues to signal a cautious, data-driven approach to future rate cuts. While these developments suggest a more stable financial environment prospectively, potential global risks remain. Slowing growth in key global markets, coupled with geopolitical uncertainties and the impending change in administration following the recent election in the US could introduce volatility; however, Barita’s diversified revenue streams and resilient business model position us well to navigate these headwinds.
Operating Performance
Barita generated net operating revenues of $10.0 billion for FY24, representing an increase of 10% or $901 million relative to FY23. The increase was broadly distributed across our various business lines, with income from the treasury, trading and brokerage and investment banking business lines being the largest contributor.
Net profit was $3.9 billion for FY24, rising 14% relative to FY23. The resulting earnings per share (“EPS”) was $3.24, up 14%.
Quarterly Performance
For the quarter ended September 30, 2024, Barita registered revenue of $3.0 billion, $1.2 billion or 72% higher than Q4 FY23, driven by a material uplift in the Treasury, Trading and Brokerage business line during the quarter. In the quarter, Barita produced NPAT of $999 million, $667 million (200%) higher than the prior year. This resulted from the aforementioned higher operating revenue, partially offset by a 26% or $346 million increase in operating expenses. Profit before taxation amounted to $1.3 billion, which was an improvement of $888 million or 207% relative to the prior year.
Shareholders’ equity closed the period at $35.5 billion, an increase of $71 million, marginally higher than the $35.4 billion outturn at the end of FY23. This was driven by an improvement of $734 million in the fair value reserve, offsetting the decline in retained earnings due to dividends declared and paid during the year. Our capital levels remain resilient, with capital adequacy of 25.45% compared to the FSC’s early warning level of 14%.
Investment Strategy & Capital Management: Our Outlook
The outlook for monetary policy continues to evolve over the course of the fourth quarter of FY24, transitioning from the tightening cycle that has dominated the past two years. Both the Bank of Jamaica (BoJ) and the Federal Reserve, along with other major Central Banks, have reduced their policy rates amidst a sustained moderation in inflation. This shift is expected to lay the groundwork for a more favourable investment environment in the coming quarters.
In the United States, recent economic indicators suggest that the cooling effect of tight monetary conditions has begun to take hold. Core PCE inflation has moderated to 2.7% from a pandemic peak of 5.7% in February 2022. Unemployment remained low at 4.1% in September but has attracted more focus from policymakers at the Federal Reserve given the upward trend since the beginning of 2024. The U.S. economy delivered solid GDP growth of 3.0% in the second quarter of 2024, exceeding expectations, but leading indicators continue to suggest potential weakness ahead. Against this backdrop, the Fed opted for a 50-basis point rate cut in September 2024, bringing the federal funds target range to 4.75%-5.00%. Markets have since priced in the expectation of further rate cuts as inflation trends towards the Fed’s 2% target.
Locally, Jamaica has seen similar progress. Annual headline inflation in Jamaica stood at 5.7% as of September 2024, back within the BoJ’s target range following the uptick in August to 6.5% due to the impact of Hurricane Beryl. Moreover, the BoJ’s recent cumulative reduction of its policy rate by 50 basis points to 6.50% during the quarter, reflects growing confidence that average inflation will remain within the target range in the near term, supported by stable domestic demand, a relatively stable exchange rate, and the continued moderation of global commodity prices. Jamaica’s economy remains resilient, albeit with moderating growth in key goods-producing and service sectors.
Looking ahead, we anticipate a further shift toward more expansionary monetary conditions, both locally and globally, which will likely enhance our ability to optimize our balance sheet and improve the net interest margin. As funding costs stabilize and earning assets continue to reprice upward, we expect to see a positive impact on our financial performance. Additionally, more favourable market conditions should provide increased opportunities for trading gains, and we foresee a gradual acceleration in deal-making activity, further boosting revenue growth.
However, we remain cognizant of the risks that persist in the global macroeconomic environment. Slowing growth in key global markets, coupled with geopolitical uncertainties and the impending election in the world’s largest economy, may introduce volatility that could impact our investment activities. Despite these headwinds, we continue to prioritize the diversification of our revenue streams, particularly through our alternative investment platform, which includes our real estate ventures that are poised to deliver significant returns in the medium to long term.
In this context, prudent capital management remains central to our strategy. We will continue to ensure strict compliance with regulatory requirements while maintaining the flexibility to capitalize on emerging opportunities. Through these efforts, we are confident in our ability to navigate the evolving economic landscape and deliver sustained value to our shareholders.
Mark Myers, Chairman Barita Investments Limited (“Barita” or “the Group”)
For More Information CLICK HERE
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iCreate Transitioning From A Digital And Creative Training Company To A Diversified Investment Holding Company Kintyre Holdings.
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First Rock Real Estate Investments Registers Net Loss For Three Months Ended September 2024, Driven Primarily By Unrealised Foreign Exchange Losses
First Rock Real Estate Investments Limited registered a net loss attributable to Ordinary Shareholders for the three months ended September 30, 2024, totalling US$674,536, which yielded an Earnings Per Share (EPS) of negative US$0.002. Net loss attributable to Ordinary Shareholders for the nine months ended September 30, 2024, totalled US$1,453,640, which yielded an Earnings Per Share (EPS) of negative US$0.005.
The results were driven primarily by unrealised foreign exchange losses on translation of foreign currency denominated liabilities, which amounted to US$72,034 for the three months ended September 30, 2024 and US$275,170 for the nine months ended September 30, 2024. Additionally, interest expense amounted to US$118,839 for the three months ended September 30, 2024 and US$524,340 for the nine months ended September 30, 2024.
The Group’s financial performance continues to reflect the impact of the ongoing high-interest rate environment in Jamaica, which exerts downward pressure on property values, resulting in lower Property Income relative to prior year. Property Income totalled US$49,056 for the three months ended September 30, 2024 and US$1,916,074 for the nine months ended September 30, 2024.
To mitigate the impact on the bottom line from reduced revenues, the Group managed to reduce its overall Administrative & General expenses by 20% to US$2,274,250 for the nine months ended September 30, 2024, compared to the same period in the prior year. This cost management effort is part of our ongoing strategy to mitigate the impact of reduced revenues on the bottom line.
Outlook
The Group’s ongoing commitment to strategic growth remains steadfast as we navigate the headwinds that obtain in today’s real estate environment. By continuing to execute on our portfolio rebalancing strategy, which focuses on acquiring high-yield, income-generating properties across Latin America and the wider Caribbean region, we have built a resilient foundation that supports sustainable growth.
During the quarter our subsidiary, FirstRock Capital Cayman, entered into an agreement to acquire a fully tenanted investment property in Grand Cayman. As the largest acquisition in our portfolio, this property is poised to notably enhance our rental income stream, reinforcing our expansion across the region. Alongside this achievement, our two KFC locations in Costa Rica continue to deliver stable rental income under longterm lease agreements, with plans underway for additional site developments.
Looking ahead, we remain optimistic about finalizing additional acquisitions across the region, with several promising opportunities in advanced stages of negotiation. The Group remains committed to unlocking value through strategic investments, which we believe will yield substantial long-term benefits to our stakeholders.
Norman Reid J.P. Chairman First Rock Real Estate Investments Limited
For More Information CLICK HERE
Edward Alexander Executive Chairman of tTech Limited announced that Simply Secure Limited increased its shareholding in tTech to 69.1%, representing 73,229,223 shares. The increased shareholding includes the purchase of 20,719,366 shares from Norman Chen and G. Christopher Reckord. The acquiring entity, Simply Secure Limited, is owned by Kevin Gordon and Rob Mayo-Smith. Messrs. Gordon and Mayo-Smith are also the owners of Simply Secure LLC, a Managed Security Services Provider based in Ft. Lauderdale, Florida.
The increased shareholding puts Simply Secure Limited over the 50% ownership threshold of the issued and outstanding ordinary shares of the company, requiring Simply Secure to extend an offer to all remaining tTech shareholders to purchase their shares subject to approval from the regulators. The tTech board will also provide an opinion on their view of the fairness of the offer price.
Norman Chen,
G. Christopher Reckord.
Following the sale of their shares, Messrs. Chen and Reckord will be resigning as Directors of tTech.
Chairman of the tTech Board, Edward Alexander, stated, “I would like to thank Norman and Chris for their service to tTech. Their contribution as executives and directors has enabled much of the success that tTech has enjoyed to date. We now look forward to the continued growth that is expected through the increased ownership in the company by Simply Secure.”
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