KPREIT looks to new property

KPREIT readies for new property investment

Wednesday, August 15, 2018

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Kevin Richards, chief executive officer of Kingston Properties Limited (KPREIT), has disclosed that plans are in place to complete the acquisition of another cash-yielding property for the real estate investment company by December.

KPREIT closed on the sale of a condo unit at the Loft II in downtown Miami earlier this year and at the same time completed a further advance on an existing loan facility with Terrabank, NA in Florida, to the tune of US$800,000. The company planned on combining funds from both the sale and the loan facility to purchase additional properties in Cayman or Jamaica.

“Our Jamaican and Caymanian property portfolios continue to do well, with full occupancy and attractive cash yields recorded in those markets. We are currently actively pursuing more acquisitions in these markets and hope to conclude a transaction by the 4th quarter of 2018,” Richards told shareholders in a statement adjoining the company's six-month financial results ending June.

Last year, KPREIT invested $362.6 million on the Tropic Centre property in Cayman and another $212.3 million on the commercial complex located at Spanish Town Road, Kingston, Jamaica.

Richards, while tight-lipped on where the December acquisition will be, notes that the ongoing acquisitions are consistent with the company's plan to pursue investments in stable or stabilising economies with great prospects for appreciating property value and stable creditworthy tenants.

“Our strategy remains focused on acquiring properties with strong fundamentals and attractive cash yields, funded by prudent levels of debt financing. As at the end of June 2018 our loan – asset and loan equity ratios stood at 28.1 per cent and 42.5 per cent respectively, which are fairly conservative when compared to our peers and provides for greater capacity to increase leverage to continue to expand the portfolio,” the CEO said.

KPREIT posted a 32 per cent year-on-year increase in group profits for its second quarter ended June 2018 bringing total profit to $26.1 million. The company attributed the increase in profit to amendments the US Tax Code had on the revaluation of some of its Florida properties as well as the depreciation of the Jamaican dollar vis--vis the US dollar.

Following the passing of the Tax Cut and Jobs Act in December 2017, the US Tax Code amendment resulted in a reduction in KPREIT's corporate tax rate from 35 per cent to 21 per cent. Additionally, KPREIT accrued tax credit as a result of the fair value loss on three appraised condo units in South Florida, as well as the loss on disposal of a condo unit also in South Florida.

The CEO reckons that the transitioning taking place with the company's US portfolio will continue for the rest of the year as the company seeks to capitalise on the gains that have been made on some of the units in the US portfolio which represents approximately 49 per cent of KPREIT's total property portfolio.

KPREIT's rental income for the three months to June 30, 2018, slightly declined by 0.8 per cent to $50.6 million while the group's operating expenses, which include direct property expenses and administrative expenses, increased from $30.7 million year over year to $32.7 million.

— Karena Bennett

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