First Rock reveals real estate investment plans

BY BALFORD HENRY
Senior staff reporter
balfordh@jamaicaobserver.com

Wednesday, June 05, 2019

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First Rock Capital Holdings Limited (FRCH) has announced plans for the investment of some US$30 million in real estate deals in Jamaica, the wider Caribbean, and even extending into the United States.

The company will be investing over US$8 million in Jamaica, US$19 million in the wider Caribbean, and US$3 million in North America, mainly in Florida, according to Pierre Shirley, First Rock's head of real estate business.

Shirley told the Jamaica Observer that the company has both residential and commercial development opportunities on its slate.

“The residential side includes a low-to medium-income development in Clarendon, a medium-to high-income development in Kingston 6, a high-income development in Kingston 8, and a luxury vacation/second home development on the north coast,” he said.

“On the commercial side, there are two prime locations where we are looking to develop boutique office buildings. With respect to the private equity deals, we are well advanced, but not in a position to speak on them at this time,” Shirley added.

FRCH raised $2.5 billion in equity capital from private investors earlier this year, and announced that it intends to use the windfall as equity in various real estate ventures and other companies.

The company's two-prong strategy is equity investment in income-producing real estate (commercial and residential), as well as doing private equity deals in which it plans to take a major equity stake in other companies. In this case, some 80 per cent of the funds will be poured into real estate, and the other 20 per cent used for equity investments.

According to Shirley, the funds will be used towards developing lands that the company is currently in the process of acquiring; securing additional properties both for rental income and developments; closing on one of its private equity deals; reducing debt; and further contributing to the overall portfolio diversification and risk-mitigation strategy, all within the initial markets.

He also acknowledged the view that First Rock has put together a very solid business proposition, which investors like and have bought into, as with real estate doing well and First Rock investing outside Jamaica and in the Caribbean and North America, clients appreciate the diversity.

“Real estate being so capital intensive, it is difficult, as an individual, to have an adequately diversified portfolio to suitably mitigate or sustain the elements of risk that one is exposed to as a real estate investor. First Rock's diverse strategy includes real estate in multiple jurisdictions, class, and types that affords our shareholders a sense of comfort and security of not being subject to a complete wipe-out from external factors that are simply beyond the control of mankind — whether it be natural disaster, political turmoil, or adverse economic conditions,” Shirley explained.

Asked how the company went about choosing its properties, Shirley said that First Rock looked for attractiveness — which is defined by location, marketability, sustainability, returns, and identifiable strategies to mitigate the foreseeable risks

He said that as part of the company's strategy, from inception or before private placement, it started identifying opportunities, so as to reduce the deployment lag post the capital raise.

“With a number of opportunities summed up in the region of $10 billion, it has afforded us the opportunity to cherry pick deals offering attractive returns relative to the foreseeable associated risks, and reject those that don't quite make the cut,” Shirley stated.

“As a part of managing expectations, entities will understand that conducting due diligence is standard protocol for transactions of this nature and, consequently, the findings will inform whether we proceed or not,” he added.

The company has investment commitments in Jamaica and the Cayman islands, but also has its eyes on opportunities in Barbados, Bermuda, Antigua, and St Lucia.

“We have commenced earning on our assets; our strategy includes rental properties. For those that we have committed to, we will start earning immediately upon completion of those transactions,” he noted.

He said that all the company's assets require that it, at least, hits the hurdle rate of eight per cent, and most of the current investments are already north of that.

He recalled that First Rock had committed to shareholders that in 2019 it would apply to list on the main market of the Jamaica Stock Exchange (JSE).

“That commitment stands. The amount we plan to raise will be informed by our rapidly expanding pipeline and new opportunities that we will want to capitalise on,” he acknowledged.

First Rock Capital Holdings Limited (FCH), an IBC incorporated in and under the laws of St Lucia,is an investment holding company with a core focus on real estate and private equity investments.

The company's primary aim is to provide shareholders with a tax-efficient vehicle, offering an enhanced level of income, above-average dividend yield, and preservation of capital through diversification assets.

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