Business

Kingston Properties to enter Little Havana

BY STEVEN JACKSON Business reporter jacksons@jamaicaobserver.com

Wednesday, May 14, 2014    

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The Fayval Williams-led Kingston Properties, which invests in real estate, expects to earn US$900,000 ($100 million) on the sale of four properties in Miami, Florida by June.

The first property recently sold for US$220,000 which garnered a 34 per cent return on investment. The company will reinvest the funds to purchase its first wholly-owned residential building.

"We will purchase a residential rental building in Little Havana. A renaissance is beginning there," said Williams in a Observer interview on Monday. "It will be our first stand alone purchase. The ownership structure is different in that we will be the landlord, whereas in condominiums the association dealt with [maintenance]."

The premises contains 19 units, which are fully occupied and located in the Cuban and Latin American centre of Miami.

"We expect to hold on for three to four years to realise the potential, because we want to ride the wave," she said about the uptick in property prices since 2008.

Rental yields are currently at roughly seven per cent per annum in addition to three per cent per annum on capital appreciation of the premises.

"So over the holding period of four years we expect to get about 35 per cent return on investment," she said.

Williams reasoned that the US market offers greater returns than similar investments in Jamaica.

"Jamaica will not offer those returns on an existing building because the capital appreciation is not as robust as in the US. The rental yields in Jamaica are higher than in Miami but at the end of holding period the capital appreciation in the US is better," she reasoned.

Kingston Properties, which is listed on the Jamaica Stock Exchange, announced that its after-tax profit dipped 70 per cent year on year to $52 million despite benefiting from rising rentals and the revaluation of its Miami, Florida condominiums.

The company earned $84.3 million profit from its Miami properties, $5 million from investments in St Lucia, but recorded a $37 million loss on its Jamaican properties, audited financials indicated.

The 2013 performance, which benefited from $130 million in Miami property revaluation gains, did not compare favourably to the year before, when local properties recorded $183 million in revaluation gains.

The real estate investment trust's portfolio currently includes 18 condo apartments (following this month's sale of one unit) in Loft II in downtown Miami; roughly 26,000 square feet office space on Hagley Park Road in Kingston, Jamaica; and some 48,000 square feet office/warehouse complex on Red Hills Road.

The revaluation gains in its Miami Condo also impacted the company's balance sheet increasing its real estate portfolio 20 per cent year on year to just above $1 billion.

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