Mr Sinclair began the proceedings by welcoming us to this the 9th annual general meeting. He stated that “ KPREIT has now developed into a real estate investment trust with properties in Jamaica, United States and Cayman Islands.” Mr. Sinclair highlighted main performance indicators during the year such as the stock appreciation which increased by 42% year over year as well as increasing dividend payments by 100%, making payments of USD $400,000 in FY2016 compared to US$200,000 paid in 2015, with a 1 year growth dividend yield that is the highest of its peers. Based on the appreciation of the stock price, Mr. Sinclair stated that the company will be seeking to do a stock split to increase the volume of shares to be sold by ordinary shareholders. He noted that the company is “91% owned by long term investors or managed funds and they want to encourage persons looking for short term returns to invest in the company and as such the company is encouraged to do a stock split.
Audited Financials Review for year end December 2016.
Mr. Kevin Richards CEO was then introduced and he stated that “The company’s vision is to become the Leading REIT creating shareholder value by its consistent and stable returns to shareholders.” He further went on to dissect the 2016 year end financials, stating that:
· Revenue (Rental Income) for the FY2016 however saw a 20.38% increase year over year to total $130.46 million. Mr Richards stated that “rental income was collected in 100%USD and this decision was made to hedge against inflation as the US market was more stable than the JMD”.
· Mr. Richards stated that “operating expenses saw a 3% decrease. The expenses were mainly direct expenses associated with the purchase of properties which was 53.8% of the expenses accrued. Administrative expenses are not expected to increase and the company does not need large volumes of staff to operate”.
· Pre-tax Profit for FY2016 totalled $164 million compared to $105 million in FY2015
· Mr. Richards stated also that “KPREIT was the leader among its peers in dividend yield. It should also be noted that the company pays its dividend in USD”
Acquisition of New Property
· Mr. Richards stated that in January 2017 KPREIT acquired a warehouse property on Spanish Town Road, Jamaica. According to Mr. Richards this was against the backdrop of expected increases in property value for that area due to the improving infrastructure. Mr. Richards also stated that it will continue to invest in Jamaica but noted its investments are mostly in warehouse and office complexes. Mr. Richards revealed also that there is an ongoing investment in Westmoreland, Jamaica and there is expected to be an announcement by the end of the month in that regard.
· Mr. Richards stated that the company also invested in a property in the Cayman Islands along the West Bay Beach area which is located in close vicinity to many hotels thus ensuring regular traffic to the location. He stated the apartment complex is more than 90% occupied. With the Cayman economy recovering they expect to see gains in these investments in the near term.
· With these acquisitions KPREIT’s investment portfolio has now moved from a 70% US and 30% Jamaican to 54%US, 32% Jamaican and 14% Cayman this is in an effort to diversify the company’s portfolio and as a risk management strategy.
The company will be seeking to continue its expansion and according to Mr Richards “We are looking at markets in the Bahamas, Turks and Caicos and the Florida area. These are mostly areas with a strong link to Jamaica”. He was asked about expansion outside the Caribbean and Americas and stated that they are pursuing all markets that show potential for Real Estate and have strategies in place to properly monitor these markets for any future investments which can provide not only acceptable yields but also require little management.
Plans For 2017
· The company plans to have an aggressive approach in 2017. Mr. Richards stated that they currently have a debt to asset ratio of 28% which is fairly low relative to its peers. As such, the company may seek more leverage for additional investments in Property
A motion was proposed for a stock split of 1:1 to be done on May 24, 2017, same was seconded and approved and should see each shareholder getting 1 additional share for each share that they possess. This will see the authorized ordinary shares move from 500,000,000 to 1,000,000,000 and issued shares increasing from 160,996,334 to 321,992,668.