Date: November 13, 2019

Sagicor Real Estate XFUND Limited (XFUND), for the nine months ended September 2019, reported total revenue of $4.76 billion relative to $7.44 billion reported in 2018, a 36% decline year over year. XFUND  stated, “This is as a result of the change in the business model, with the sale of the hotels last year where the discontinued operations contributed revenues of $2.7 billion and the gain on the sale of the hotels.”

Hotel revenue for the nine months period increased to $4.64 billion relative to $4.20 billion in 2018, an 11% improvement year over year. Net investment income closed the period at $17.55 million (2018: $20.09 million), while net capital gains on financial assets and liabilities amounted to $95.77 million relative to net capital gains of $148.12 million in the prior year.

Hotel revenue from discontinued operations amounted to $2.71 billion in 2018 relative nil in 2019.

Operating expenses fell by 29% to $4.70 billion (2018: $6.58 billion). For the quarter, operating expenses amounted to $1.56 billion compared to $1.35 billion reported in the prior corresponding quarter.

Of this:

ü  Hotel expenses increased to $3.50 billion, up by 17% when compared to $2.99 billion in the prior comparable year.  For the quarter, hotel expenses closed at $1.12 billion versus $839.92 million in the prior comparative quarter.

ü  There was depreciation of $572.85 million (2018: $651.83 million) for the period under review. Depreciation for the quarter totaled $219.14 million (2018: $346.27 million). Interest expense for the period declined 36% to $542.19 million (2018: $853.24 million).

ü  Other operating expenses increased to $92.32 million (2018: $50.40 million). While for the quarter, other operating expenses surged by 149% to close at $30.68 million (2018: $12.33 million).

ü  Expenses from discontinued operations totaled $2.04 billion for the nine months ended September 30, 2018 compared to nil in for te corresponding period in 2019.

Operating profit for the period amounted to $54.54 million compared to $859.89 million booked in 2018.

Share of loss from associate accounted for using equity method amounted to $273.59 million compared to a loss of $105.50 million. The company reported profit before tax of $328.13 million relative to profit before tax of $754.29 million for the nine months. After incurring tax charges of $285.19 million (2018: $43.85 million), net profit of $42.94 million was recorded compared to a net profit of $510.44 million 2018. However, for the third quarter, net loss amounted to $990.25 million versus a net loss of $259.73 million as at September 2018.

The loss per share (LPS) for the nine months closed at $0.03 relative to an EPS of $0.25 in 2018. While, the loss per share (LPS) for the quarter amounted to $0.44 (2018: LPS of $0.0039). The trailing twelve-month LPS is $0.206.  The number of shares used in our calculations was 2,243,005,125. As at November 13, 2019, the stock traded at $10.80.

Management highlighted that, “The prior year’s results include a onetime gain of $367 million stemming from the sale of the Jewel hotels. The current year numbers include a tax charge of $200 million on dividends repatriated from DoubleTree by Hilton (DoubleTree) to its immediate parent, X Fund Properties Limited. Also, Lower capital gains from Sigma Real Estate Fund units as most of the portfolio was liquidated in 2018 as part of the X Fund reorganization.”

XFUND stated, “Our direct and indirect investments in the hospitality sector have performed well for the period, and we remain focused on looking for opportunities to execute on the X Fund strategic intent to be the leading Real Estate Investment Fund (REIF) in the Caribbean.”

Balance Sheet Highlights:

The Company, as at September 2019, recorded total assets of $51.45 billion, an increase of 3% when compared to $49.86 billion recorded as at September 2018. The increase was due to 13% and 3% growth in ‘Property, Plant & Equipment and ‘Investment in Associate, respectively. ‘Property, Plant & Equipment’ closed the period at $15.16 billion (2018: $13.44 billion), while ‘Investment in Associate’ amounted to $29.66 billion (2018: $28.83 billion).

Total Shareholders’ Equity as at September 30, 2019 closed at $26.48 billion, a 7% increase from the $24.75 billion reported for the corresponding period last year. This resulted in a book value per share of $11.81 (2018: $11.03).

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