KPREIT reports net profit of $10.36 million for the nine months period

Date: November 15, 2018

Kingston Properties Limited (KPREIT) for the nine months ended September 30, 2018, reported rental income of $152.35 million, 3% more than the $147.67 million reported for 2017. However, for the quarter, there was a 4% decline from $46.58 million in 2017 to $44.78 million in 2018. Property management fees for the nine months period amounted to $3.51 million (2017: $6.96 million). KPREIT mentioned that, “the decline in rental revenue is attributed to the reduction in the number of condo units held during the quarter when compared with the same period a year prior, along with the usual spike in vacancy in the units held at the W Fort Lauderdale during the summer months.”

Operating expenses increased by 10% to $101.29 million (2017: $91.92 million).The Company recorded a Fair value loss on investment properties of $10.68 (2017: nil). For the quarter, operating expenses closed at $32.07 million versus $29.82 million in the prior corresponding quarter.  The Company stated that, “operating expenses for the first nine months of the year reflect higher year on year direct property and administrative expenses, such as HOA dues and audit and professional fees.”

Loss on disposal of investment properties amounted to $34.47 million relative to nil in 2017, while fair value loss on investment properties totalled $10.68 million (2017: nil).

As such, Results of operating activities before other gains amounted to $9.71 million, an 85% decline (2017: $63.17 million) when compared to the corresponding period in 2017. For the quarter, Results of operating activities before other gains reported a loss of $14.53 million relative to a gain of $18.07 million.

Net finance cost was $29.79 million for the nine months period compared with $30.71 million for the same period in 2017, a 3% decline year over year. Net finance cost for the quarter totalled $7.66 million (2017: $11.27 million).

This led to a loss before taxation of $20.08 million versus a profit before taxation of $32.46 million the year prior. For the quarter, KPREIT recorded loss before taxation of $22.19 million compared to a profit before taxation of $6.80 million.

Tax credit of $30.44 million was booked compared to a tax charge of $8.63 million last year. This resulted in net profit for the period of $10.36 million compared to $23.83 million for the same period last year. For the quarter, the Company reported a net loss of $24.56 million relative to a net profit of $3.04 million.

Earnings per share amounted to $0.03 for the period under review (2017: $0.07). However, for the quarter, loss per share of $0.08 was recorded in 2018 versus an earnings per share of $0.01 in the previous corresponding period. The twelve-month trailing EPS amounted to $0.20. The number of shares used in our calculations is 321,992,668. As of November 14, 2018, the stock was trading at $5.00.

Balance Sheet at a glance:

As at September 30, 2018, total assets amounted to $2.68 billion, $66.58 million more than the $2.61 billion booked as at September 30, 2017. The increase in assets was a result of an increase in ‘Cash and Cash Equivalent’ and ‘Receivables’ which closed at $184.97 million (2017: $15.30 million) and $56.17 million (2017: $32.37 million), respectively.

Total Shareholders’ Equity closed at $1.81 billion, up 5% from $1.73 billion reported in 2017, thus resulting in a book value per share of $5.62 (2017: $5.36).

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