(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 financial year ended August 31, 2023 (“FYE Aug 2023”). SRF reported a book value per share of J$23.89 for FYE Aug 2023, compared with J$23.24 per share last year, while net profit attributable to shareholders was J$211.44 million compared with J$692.95 million last year. The company’s average return on equity over its 4 years since it began operating was 22.9%.
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, was on track to achieve practical completion before the end of 2023, with most of the prospective tenants advancing the planning and design of their respective interior buildouts. The building is expected to be occupied during the 2024 calendar year. The construction of the built-to-suit industrial warehouse facility on Spanish Town Road was completed while SRF exited the majority of its investment by sale to institutional investors. The company fully exited its third party real estate investment note (REIN) in “Norbrook Wasser”, a luxury residential development. Overall, SRF exited J$594.28 million in REINs during the financial year.
During the period, the company also made advancements in the process to unlock value from key strategic assets including Mammee Bay in St Ann, 56 and 58 Lady Musgrave Road, and Lakespen in St Catherine. SRF is entering its second investment cycle, with commencement of design development works slated to begin for Lakespen shortly, while work on Mammee Bay is advancing.
SRF reported total investment income or core revenues of J$765.56 million for FYE Aug 2023, compared with J$1.35 billion in FYE Aug 2022. This result was primarily driven by lower valuation gains experienced on investment property and lower share of gain on joint ventures compared to the previous year, which more than offset higher lease income relative to last year. Total investment income was also impacted by higher interest expense which resulted in negative net interest income relative to positive net interest income last year.
Net profit attributable to shareholders was J$211.44 million compared with a net profit of J$692.95 million last year, mainly driven by a reduction in net investment income of J$671.01 million compared with J$983.59 million last year.
As at FYE Aug 2023, SRF’s investments were allocated across 9 sub-categories of real estate, with the largest allocation to hospitality – investment property with 38.3%, industrial-investment property with 17.2% and commercial-investment property with 14.5%. SRF’s capital was allocated across three investment categories, namely property investments at 77.4%, real estate investment notes (REINs) at 12.2%, and investment in joint venture at 10.3%.
“SRF is nearing the end of its first investment cycle, with the completion and majority exit of Spanish Penwood, closing in on the completion and subsequent prospective exit of the One Belmont Commercial Tower, and continuing its exit from some of its third party residential projects. Simultaneously, the company is preparing to start its second investment cycle, with the unlocking of value from its major strategic assets including Lakespen and Mammee Bay. The overlapping of the two investment cycles will likely result in a short period of lower deployment activity at the back end of current project completions and exits, which will ramp up once the new investment cycle starts during the course of the 2024 financial year. SRF is in the final stage of execution for projects valued at over J$5.3 billion. We are particularly looking forward to the completion and partial exit of One Belmont, and the start of the execution of the new projects during 2024.”, 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/