XFUND Investor Briefing- November 15, 2018

Date: November 15, 2018

Sagicor Real Estate XFUND Limited (XFUND) held its investor briefing today at The Auditorium, Sagicor Life Head Office which was hosted by Richard Byles, Chairman of Sagicor Real Estate X Fund. The meeting began with the usual welcoming and introductions which was subsequently followed by an overview of the Company.

Ms. Brenda-Lee Martin, CEO of Sagicor Real Estate X Fund, gave a brief presentation on the Company and highlighted the two major investments of the Company namely ‘DoubleTree’ and ‘Jamziv.’ Ms. Martin indicated that, “the Group liquidated 91% of its Sigma Real Estate Portfolio (Sigma Portfolio) units in exchange for shares in Jamziv Limited, thereby increasing its holding of Playa shares indirectly.”

Additionally, “the Group held 12,258,000 Playa shares, representing a 9.4% ownership stake in Playa, and 643 million units, or 5.4% interest in the Sigma Portfolio.” She further mentioned that, “Playa announced a strategic alliance with the Hilton group, where Playa will leverage their industry leading all-inclusive expertise with Hilton’s global portfolio of brands, and over 82 million participating members in Hilton Honors, Hilton’s award-winning loyalty program. Playa’s commitment to expansion through brand affiliations and strategic alliances, as well as through property acquisitions and developments is expected to produce strong growth over the medium to long term as our outlook remains positive for tourism in the region.”

Ms. Martin went on to elaborate on the outlook for ‘DoubleTree’, which “occupies up to 400,000 guests annually”, stating that the Company plans on expanding its meeting rooms spaces. With this expansion, there is expected to see improved average daily rates (ADR) and EBITDA.

Subsequently, Mr. Bruce Wardinski, CEO of Playa Hotels and Resorts, spoke on the status and outlook for Playa. The challenges that Playa are faced with includes:

  • Near term construction and rebranding disruption. This includes the shut-down of the resort, in order to facilitate construction works.
  • Recent transition from Mark Travel to lower cost and direct expenses.
  • Continued rate of softness and discounting among the Company’s competitive set in Cancun and The Riviera Maya which is a headwind to ADR growth and margins.

As for the opportunities, Mr. Wardinski mentioned that:

  • U.S. branding all inclusive, increase direct bookings, increase management opportunities and exposes a larger pool of guests to the Playa all-inclusive experience.
  • Strong demand is driving slightly higher occupancies.
  • Continued momentum in driving direct booking and lower cost distribution demands is a long term positive for margins and “owning” the guest relationship.

In addition, the outlook for Playa moving forward:

  • Hyatt Cap Cana Completion
  • Completion of the two Hilton conversions
  • Vacation club implementation
  • Core business improvements
  • Real estate partnerships, JVs, Silver Equity
  • Secure new management contracts or asset-light partnerships

The CEO for Playa closed by stating that, “there is a light at the end of the tunnel for the Company and the tunnel is no longer than twelve months.”