July 14, 2021
Kingston Properties Limited (KPREIT) kick starts its 13th Annual General Meeting with Chairman, Garfield Sinclair’s remarks, where he explained how the company has been operating throughout the pandemic. Mr. Sinclair noted,
- “The pandemic was a defining moment for the world and the Group had to reorder its priorities.
- 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:
- Disposed of 6 units from the South Florida condo portfolio to transition into higher-yielding properties in the Cayman Islands and Jamaica.
- Acquired a fully tenanted office building in the Cayman Islands. As well as an approx. 88,000 SF warehouse complex in Kingston, Jamaica.
- Reduced overall cost of borrowing to less than 4% p.a.
- Stock price improved almost 10% in 2020.
- Paid out 66% of net profits as dividends.
- Bought-back 50,000 stock units to give back to shareholders.
Lastly, Mr. Sinclair highlighted the ‘Main Strategic Imperatives’ in which he stated that, “as part of KPREIT’s resilience, growth strategy and cognizant of the market currents that confront the Company, our key priorities over the next 12 months include:
- Capital growth,
- Geographic assets portfolio diversification;
- Leveraging strategic partnerships for growth, and,
- Executing on our digital roadmap.”
Mr. Kevin Richards, Chief Executive Officer, stated that, “despite the pandemic, it was a good year for the company.” At the end of 2020, Kingston Properties Limited gross rental income amounted to US$2.13 million, square feet owned amounted to 282,348, 17 properties owned, with 86% occupancy and a dividend yield of 2.10% over a 5 year period. “Fortunately while many property owners were losing tenants, our main concern was retaining tenants,” Mr. Richards noted.
The Group reported an operating profit of over $1.4 million with a net profit amounting to $612,725. Value of investment Property Increased by $14.2 million to $38.19 million with additions to Investment Property totaling $15.6 million. Total Assets saw a net gain of $5.6 million to $45.6 million.
Kingston Properties is currently located in Jamaica, United States, and the Cayman Islands. The CEO Mr. Richards 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 Cresent office Building both located in Jamaica.
As at the end of 2020, KPREIT 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. “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,” noted Mr. Richards.
Mr. Richards then stated that the performance of the company is highly dependent on macroeconomics factors, he predicts that the USA and Cayman Islands are likely to recover faster than Jamaica, therefore investment focus will shift to those jurisdictions. KPREIT concluded that the top real estate market trends are;
- Demand for logistics and data centers, warehousing, and self-storage being driven by the rise in e-commerce and the pandemic.
- Growth in co-working spaces.
- A return to multi-family residential properties.
- Continues shift in migration patterns to low-cost US states.
- Construction of more low to mid-rise properties in the region for office and residential purposes.
- Increased demand for multi-purpose properties (offices & warehouse combo)
- Greater Concern for the environment and sustainable live and workspaces.
Notably, “We are planning several things currently, this includes acquiring a multi-family property in the USA in short order and increase property holdings in Jamaica for warehousing & logistics, and mixed-use spaces. The key for our growth is acquiring bigger properties through joint ventures,” as per Mr. Richards. KPREIT Strategy Execution is as follows;
- Conventional Investment
- Deal Syndication and Joint Ventures
- Green Certification
- Ground-up Development
- Geographical Diversification
- Digital Evolution
Furthermore, Mr. Richards noted the plans for the Company going forward include;
- Pursue opportunities in commercial real estate space focusing on value-added industrial and multi-purpose properties.
- Large scale warehouses & logistics centres multi-purpose and flex-space properties.
- Acquire stakes in companies operating in the captioned space. (Minimum 20% stake)
- Roll out a new digital platform for greater engagement with stakeholders.
- Continue fundraising efforts.
“Going forward we are making a slight shift to Opportunistic/ Greenfield projects, this is ground-up projects. We always wanted to do ground-up development but were waiting on the right partners. 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,” as noted by Mr. Richards. Also, as indicated by the CEO, “the shift would change KPEIT investment portfolio to 65% value- added (currently 43%), 20% core/ stabilized (currently 57%) and 15% opportunistic/greenfield projects (currently 0%).”
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