Sagicor X Fund earns $940m in 2 months

Sagicor X Fund earns $940m in 2 months

Wednesday, April 23, 2014

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SAGICOR Real Estate X Fund earned $940 million in just two months.

The net profit reported for the period November 1 to December 31, 2013, was entirely due to the change in the market value of the units it purchased in the Sigma Real Estate portfolio a little under a month after going public.

Operating expenses for the two-month period was $100,000, which was paid over for professional expenses. The company incurred $1,000 in tax.

The X Fund pays a one per cent income tax rate because of an allowance given by the CARICOM Treaty, which doesn't subject the company registered in St Lucia to the one-third rate applicable in Jamaica.

Also, Sigma Real Estate portfolio holds more than half of its assets in properties and doesn't pay taxes on its income as a unit trust.

"What we wanted to do was ensure that the tax-free status remained as we went as a listed company," Rohan Miller, Sagicor X Fund CEO, previously told the Business Observer.

Last November, the company raised $1.5 billion following an initial public offering of 200 million ordinary shares (or 20 per cent of the company) at $5 each. Funds raised will develop a water park at Jewel Runaway Bay Beach and Golf Resort.

The X Fund is 67.71 per cent owned by the Sagicor Pooled Pension Funds Limited, which is administered by Sagicor Life Jamaica.

Its main business activity is to invest in real estate activities, which includes three hotels: Jewel Paradise Cove Beach Resort and Spa, Jewel Runaway Bay Beach ,and Golf Resort and Jewel Dunn's River Beach Resort and Spa. Its properties also include non-hotel properties — totalling nine industrial and warehouse properties as well as office and retail business properties, which comprise commercial properties such as the R Danny Williams building, the Sagicor Sigma building in New Kingston, and industrial parks on Marcus Garvey Drive in Kingston and in Freeport, Montego Bay.

In addition to tax efficiency, investment in the fund also has a currency hedge that investors are set to benefit from, according to Sagicor.

They are spread across different locations in the island, with an occupancy rate of about 88 per cent and with relatively secure rental income, said Richard Byles, president and CEO of Sagicor Life Jamaica and chairman of the X Fund.

In 2017, the three hotels are projected to earn US$14.6 million in net profit from US$59.4 million in revenues.

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