Sagicor Real Estate X Fund raises $5.2 billion

Sagicor Real Estate X Fund raises $5.2 billion

BY STEVEN JACKSON Business reporter

Tuesday, September 08, 2015

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SAGICOR Real Estate X Fund raised $5.2 billion in its upsized rights issue describing it as the largest offer of its kind to date.

The fund will use the funds to aid it in the purchase of a US hotel close to Universal Studios and Walt Disney World in Orlando, Florida.

"Thanks for making this Jamaica's largest rights issue," stated Sagicor X Fund in a statement this week about its oversubscribed rights issue.

The issue, which raised 747 million shares at $6.95, closed on September 2. The upsized issue indicated market support for its first hotel acquisition outside Jamaica on a property that on the surface earns less per room than its existing four hotels, but would represent one of its largest acquisitions.

On 23rd July the X Fund announced its intention to make a non-renounceable rights Issue. It followed a June 25 purchase agreement with the owner of the DoubleTree by Hilton at the entrance to Universal Studios.

The X Fund plans to use the funds to aid it in acquiring the 742-room DoubleTree by Hilton Hotel at the entrance to Universal Studios in Florida and 15 minutes away from Disney World for US$75 million.

The balance of the purchase price is expected to be financed by a US institutional lender, according to the X Fund prospectus.

The hotel and grounds span nearly 63,000 square feet with a large convention centre, restaurants and shops including its own Starbucks café. But it also offers an opportunity to develop more retail and/or restaurants along Kirkman Road to complement the hotel.

Additionally the X Fund will mull renovating the rooms in an effort to increase revenues.

The prospectus avoided revealing the US hotel's financials, but did indicate that the hotel earns US$87 in revenue per available room (Rev/par) in 2015 up from US$72 in 2014 and US$67 in 2013.

Rev/par tells the average daily earning from each room when factoring in occupancy levels. These rates do not necessarily include meals, while its Jamaica properties would operate under an all-inclusive model. The Jewel Runaway Bay and Jewel Paradise Cove hotels each earn a Rev/Par of US$199., while its Jewel Dunn's River and Hilton property each earn a rev/par of US$232, according to the prospectus.

The hotel will become X Fund's second Hilton property after its US$85 million acquisition of Hilton Rose Hall in St James, finalised in January. The specific Double Tree hotel is a three-and-a-half star hotel built in 1974 and renovated in 2012 with unionised labour, according to the prospectus.

The X Fund made net profit attributable to stockholders at J$687 million for the second quarter 2015 or 67 per cent higher than a year earlier.

Total assets increased by J$6.9 billion to J$21.2 billion at the end of June 2015 due to its acquisition of the Hilton Rose Hall Beach Resort & Spa as well as appreciation of units in the Sigma Real Estate Portfolio. Total shareholder equity as at June 30, 2015 was J$9.8 billion.

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