(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 six months (“6 Month 2023”) and second quarter ended February 28, 2023 (“Q2 Feb 2023”). During 6 Month 2023, the company deployed J$2.03 billion in investment commitments, compared to J$1.05 billion last year. Total real estate investment assets increased by 38.7%, exceeding the J$14 billion mark for the first time, while book value per share increased by 7.6% to J$22.32.
The Company continued to unlock value from its major real estate investment assets by achieving another set of key milestones, namely, advancing: the J$3.70 billion Belmont Road 9-storey commercial tower to 82.0% completion and remaining on track for completion in summer 2023 with 80% of the corporate office space effectively having renewable 10-year agreements-to-lease; the construction of the built-to-suit industrial warehouse facility on Spanish Town Road to 93.0%, which is scheduled for completion by May 2023; 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$9.4 million for 6 Month 2023, compared to core revenues of J$30.6 million for the corresponding period ended February 28, 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. 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 6 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$301.9 million compared with a net loss of J$124.7 million last year, mainly driven by higher interest expense of J$153.7 million compared with J$65.5 million last year. SRF reported J$693.0 million in net profit for the year ended FYE Aug 2022.
As at Q2 Feb 2023, SRF’s investments were allocated across 9 sub-categories of real estate, with the largest allocation to hospitality – investment property with 37.2%, industrial-investment property with 16.6% and commercial-investment property with 14.3%. SRF’s capital was allocated across three investment categories, namely property investments at 75.9%, real estate investment notes (REINs) at 15.5%, and investment in joint ventures at 8.6%.
“SRF remains fully focused on executing its strategy of unlocking value in real estate assets and remains committed to increasing shareholder value. The Company is currently exiting investments valued at over J$1 billion and is in the final stage of execution for projects valued at over J$4 billion. As such, SRF may consider paying its first dividend sometime during the 2023 calendar year after putting capital aside for new investments and debt repayments. SRF continues the process of unlocking value from the major assets on its balance sheet, as it seeks to increase book value per share from the current level of J$22.32 while striving to maintain its three-year track record of generating a double digit return on equity”, stated Jason Morris, Executive 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/