Sagicor X Fund increases stake in Sigma portfolio

Sagicor X Fund increases stake in Sigma portfolio

BY AVIA COLLINDER Business reporter

Saturday, August 13, 2016

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For the six months ended 30 June 2016, Sagicor X Fund’s performance was $404 million or 56 per cent higher when compared with Q2 2015 – an improvement attributed to higher net profit from the Group’s hotels and gains from units in the Sigma real estate portfolio.

The Fund reported consolidated net profit of $1.12 billion compared to $720 million for the second quarter in 2015. The surge over the new half-year was due to net profit from direct hotel operations of $614 million and net gain from units in Sigma Real Estate Portfolio of $500 million.

The Group’s performance was buttressed by unrealised gains from investment in the Sigma Portfolio which was higher than 2015 by $523 million. Net profits earned by the Sigma Portfolio (before revaluation gain) was $1.16 billion (2015 - $1.12 billion).

The Group now holds 50 per cent interest in the Sigma Real Estate Portfolio (the Sigma Portfolio), up from 43 per cent at Q1 2016.

The portfolio has property investments in the tourism sector through ownership of three Jewel Resorts-branded hotels, and in the real estate sector by owning four office/retail shopping buildings, three industrial/warehousing properties and three prime land holdings slated for development.

The net earnings in the portfolio, which forms the basis for appreciation of the Sigma Portfolio unit values, was based on 2016 revenue of $5.74 billion – of which $3.97 billion was earned by the Jewel hotels, with property revaluation of $1.13 billion. Earnings before Interest Tax Depreciation and Amortisation (EBITDA) was $2.45 billion, and net profit was $2.29 billion.

Otherwise, the Fund’s hotel operations comprise two hotels directly owned by the Group: the Hilton Rose Hall Resort and Spa (Hilton Rose Hall) and DoubleTree Universal in Orlando, Florida. The X Fund acquired the 489-room Hilton Rose Hall effective January 2015, and the 742-room DoubleTree in September 2015.

Directors noted that despite being in their first 18 months of operation, both hotels have shown positive performance. For Q2 2016, Hilton Rose Hall generated net profit of $415 million with $199 million from DoubleTree. EBITDA was $1.45 billion.

DoubleTree accounted for $596 million of the 2016 net earnings. This hotel was acquired in September 2015 and hence was not a part of Q2 2015 results.

Earnings per stock unit (EPS) was $0.50 (Q2 2015 - $0.46) and return on average Stockholders’ Equity (ROE) was 13.89 per cent. In addition to the net profit, these performance ratios were impacted by more ordinary shares in issue.

In September 2015, a rights issue grew stockholders’ equity by $5.2 billion, with the number of stock units increasing from 1,495,336,750 to 2,243,005,125. The weighted average number of shares for EPS was 2,243,005,125, compared to 1,557,779,383 on June 30, 2015.

Directors note that, going forward, the financial year 2016 will reflect a full year’s performance for the DoubleTree, as well as improved performance from the newly renovated properties – Jewel Runaway Bay, Jewel Paradise Cove and Hilton Rose Hall.

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