(Kingston, Jamaica) Sygnus Real Estate Finance Limited (“SRF” or the “Company”), a specialty real estate investment company, which uses flexible capital (debt and equity) to unlock value in real estate assets across the industrial, residential, commercial, hospitality and infrastructure segments, released its financial results for the nine months (“9 Month 2023”) and third quarter ended May 31, 2023 (“Q3 May 2023”). During 9 Month 2023, the company deployed J$2.82 billion in investment commitments, compared to J$2.42 billion in the corresponding period last year. Total real estate investment assets increased by 27.9%, exceeding J$14.1 billion dollars, while book value per share increased 6.3% to J$21.82.
The Company continued to unlock value from its major real estate investment assets by achieving another set of key milestones. The J$3.70 billion Belmont Road 9-storey commercial tower, which features 310 parking spaces, a modern design and 5 floors of commercial space, achieved 100% in effective leases for the 78,790 sq. ft. development. The project advanced to 87.0% completion and was targeting practical completion for September 2023. The construction of the built-to-suit industrial warehouse facility on Spanish Town Road achieved 99.0% completion and SRF received the security deposit during the quarter based on a 10-year executed lease agreement, with the first rental payment forthcoming. During the period, the company also made advancements in the planning and designing phase of several strategic assets including Mammee Bay, Monadh Rois, Lakespen and adjacent properties at 56 and 58 Lady Musgrave Road.
The Company reported total investment income or core revenues of J$2.7 million for 9 Month 2023, compared to core revenues of J$60.2 million for the corresponding period ended May 31, 2022. This result was primarily driven by higher interest expense due to increased use of debt to finance growth in real estate investment assets compared to the previous year. The short-term use of additional debt was used to bridge the forthcoming exit from multiple projects over the course of the next few quarters. SRF reported J$1.35 billion in total investment income for the financial year ended August 2022 (“FYE Aug 2022”).
In keeping with previous interim results, SRF’s 9 Month 2023 financial statements do not reflect the major value creation derived from its business model, namely its investment in developments and investment properties. This value is typically reflected at the end of each financial year, or when a project has been completed or fully exited. This results in “uneven” interim financial results which are typically normalized by the end of the financial year when revaluations occur.
Given no material total investment income during the period, net loss attributable to shareholders was J$465.1 million compared with a net loss of J$197.5 million last year, mainly driven by higher interest expense of J$235.0 million compared with J$101.3 million last year. SRF reported J$693.0 million in net profit for the year ended FYE Aug 2022.
As at Q3 May 2023, SRF’s investments were allocated across 9 sub-categories of real estate, with the largest allocation to hospitality – investment property with 37.6%, industrial-investment property with 16.5% and commercial-investment property with 14.2%. SRF’s capital was allocated across three investment categories, namely property investments at 76.5%, real estate investment notes (REINs) at 15.0%, and investment in joint venture at 8.5%
“SRF remains fully focused on executing its strategy of unlocking value in real estate assets and remains committed to increasing shareholder value. In this regard, we are particularly excited about the pending exit from the fully leased Spanish Penwood industrial facility and the near completion of the 100% leased flagship One Belmont commercial tower. The Company is currently exiting investments valued at over J$1.80 billion and is in the final stage of execution for projects valued at over J$4.0 billion. As such, SRF may consider paying its first dividend sometime during the 2023 calendar year depending on the outcome of its financial results towards the end of the calendar year. While we are in the process of exiting investments and unlocking value from the major assets on SRF’s balance sheet, we are also looking forward to starting SRF’s first owned luxury residential project in the golden triangle, as we strive to continue increasing book value per share while maintaining the three-year track record of generating a positive return on equity every fiscal year”, stated Jason MorrisExecutive Vice President and Chief Investment Officer at Sygnus Group.
The Sygnus Group is a leading alternative investment management firm in the Caribbean, comprising private credit, real estate, and private equity. Headquartered in Jamaica, Sygnus has also established operations in St. Lucia and Puerto Rico. Sygnus manages Sygnus Credit Investments Limited (SCI), which is listed on the Jamaica Stock Exchange and is the largest English-speaking private credit investment company in the Caribbean. SCI is a pioneer in private credit investment, offering creative debt financing options to mid-market companies throughout the Caribbean. Sygnus Real Estate Finance Limited (SRF) provides flexible debt or equity capital to all classes of real estate assets, commercial, industrial, or residential. Sygnus Deneb Investments Limited (SDI) invests private equity capital in companies in the form of growth capital, acquisitions, and restructuring. Sygnus also offers its clients investment banking and wealth management services. For additional information, visit Sygnus Group at https://sygnusgroup.com/