BANK of Jamaica (BOJ) has purchased the former French Embassy located at 13 Hillcrest Avenue in St Andrew for US$7.965 million ($1.25 billion) from Sygnus Real Estate Finance Limited (SRF), which continues to optimize your real estate portfolio.

The transaction was registered on September 18, according to National Land Agency records, while SRF’s audited financial statements indicated that the sale was finalized on October 3. Charlemagne Holdings Limited, the wholly owned subsidiary of SRF, purchased the property in November 2021 from the French state. for US$6.50 million ($1.01 billion) and then leased it to the Attorney General’s Office, which remains its current tenant. It is unclear what the Jamaican Central Bank will do with this 3.2-acre mixed-use commercial/residential property.

This is SRF’s second notable sale this year, following the sale of 1.2 acres of land at 56-58 Lady Musgrave Road, also in St Andrew, to Ripton International Capital Holdings Limited for £4.5 million. dollars ($697.99 million). SRF has also listed the 0.5 acre property at 26 Seaview Avenue, St Andrew, which has a current book value of $291 million.

These sales come at a time when SRF is preparing to end its first investment life cycle which saw it complete two major development projects, namely Spanish Penwood and One Belmont. Spanish Penwood, a 2.85 acre property located at 443-445 Spanish Town Road, St Andrew, was sold for $650.54 million in the 2024 financial year, resulting in a loss on disposal of 77 .28 million dollars. However, SRF subsequently concluded a rental participation contract (LPA) which gives it the right to benefit from one third of the rental income generated by the building. SRF spent $385.70 million to acquire this beneficial interest through the LPA.

Regarding One Belmont in New Kingston, St Andrew, SRF has substantially completed the nine-storey office building at 1-3 Belmont Road, Kingston 5, and is currently completing cosmetic works such as renovation works. landscaping. Five floors of this property have actually been leased, with the first tenant occupying the space next month.

However, regarding the monetization of this asset, it has not yet been publicly announced to shareholders. During last Friday’s conference call, Jason Morris, co-founder and chief investment officer of Sygnus Capital Limited, emphasized that SRF would retain an economic interest in the property while monetizing the underlying value attached to it. SRF owns a 70 percent stake in Audere Holdings Limited, the joint venture that owns One Belmont, now valued at $5.80 billion.

These investments were made as part of SRF’s first investment life cycle, which can be described as the first project period in which the company unlocked value in real estate through different routes. The company’s second investment life cycle will focus on a 14.4-acre property at Mamme Bay, St Ann, and a 55-acre property at Lakespen, St Catherine. These assets will focus on themes in the hotel and industrial segments.

“We have received additional studies that we had alluded to, so we continue to make very good progress towards a decision phase with this particular property. Once we have achieved this milestone, of course, we will be able to advise you on how we are going to unlock the value of this magnificent beachfront property,” said David Cummings, Head of Real Estate and Marketing. project financing at Sygnus Capital.

SRF has obtained preliminary approvals from the National Environment and Planning Agency (NEPA) to develop a 250-room hotel and nine bungalows, with 21 villas. This property is valued at $5.79 billion.

The Lakespen property is located in the St. Catherine industrial belt, and the earnings call indicates construction is planned for mid-2025. However, Cummings mentioned that the approval process between NEPA and St Catherine Parish Council can take between four and seven months, which is separate from the design phase of what will be the envisaged industrial real estate asset.

SRF is also expected to explore opportunities for the 0.9 acre property on Montrose Road, where it holds a 51 per cent stake in joint venture Monadh Rois Holdings Limited.

SRF’s interest income from its real estate investment notes (REINs) declined 29 percent to $180.07 million in fiscal 2024 ending Aug. 31, with some of the real estate projects financed by these REIN having been completed and sold. After accounting for higher interest expense, net interest expense increased 208 percent to $202.78 million.

Despite higher fair value gains on its real estate assets and benefiting from reduced operating expenses, SRF still recorded a consolidated operating loss of $130.88 million. After accounting for the profit share of its two joint ventures, SRF’s pre-tax profit improved 140 percent to $362.61 million, with net profit up 49 percent to $315.08 million dollars.

Total assets increased 5 percent to $15.85 billion, with investment properties valued at $9.26 billion and cash reaching $900.97 million. Total liabilities stand at $7.74 billion, with the company raising $25.90 million ($4.11 billion) – made up of $15 million and $1.76 billion – between August and October as part of a private placement. Equity is up 4 percent to $8.12 billion and book value is $24.85.

SRF’s share price closed Tuesday at $11.50/US$0.0495, leaving the Jamaican dollar stock up 12 percent in 2024 while the US dollar stock is down by 29 percent since the start of the year. SRF will consider its first dividend at its board meeting today, following the recent sale of various assets. SRF is also working with JSE on the issue of payment-in-kind shares to Sygnus Capital and warrants to general shareholders.

If SRF remains solely invested in Jamaica for the moment, the future prospects in the Caribbean are not very distant for the property company. It will seek to deepen access to flexible capital and add value to the Jamaican real estate market through joint ventures, co-developments and REINs. As for two REINs that didn’t work out, Morris noted that the Ocean’s Edge development has received good offers so far. Ocean’s Edge Country Club was a property development in Ocean’s Edge that did not come to fruition and went into receivership, with 16 unfinished townhouses managed by Business Recovery Services Limited, which is the receiver/manager.

“As a specialist alternative investment firm dedicated solely to the real estate asset class, SRF aims to play a leading role in expanding access to flexible capital with the aim of unlocking value in real estate assets across the Caribbean. SRF has progressed toward this goal by partnering with owners of strategic real estate assets through joint ventures. In the next financial year, SRF will strengthen its collaboration with strategic asset owners through joint ventures or joint investments to unlock value in real estate assets,” says SRF’s report on potential opportunities for the fiscal year 2025.