PanJam shareholders on edge

But Hanworth defends Oceana Hotel mixed use purpose

BY KARENA BENNETT
Business reporter
bennettk@jamaicaobserver.com

Tuesday, May 22, 2018

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A few shareholders of PanJam Investments Ltd are now questioning management's decision to use for hotel accommodation section of the Downtown Kingston-based Oceana building.

The reservation, which was expressed during the company's annual general meeting last Thursday, was particularly based on Oceana's Downtown Kingston location, which some shareholders reckon is not fitting for the hotel sector business model.

“There is no doubt that there are those who continue to believe that Downtown Kingston has no future, we don't share that view. We think that the waterfront in any city is the most valuable space and I think you're going to find in the years to come that that will prove to be true,” Chief Operating Officer Paul Hanworth said in defending the company's position to use a section of the hotel for mixed purposes.

“We are and will always be a leader in the development of real estate in Jamaica and we think this is part of that leadership,” he continued.

PanJam, which this year completed acquisition of the Oceana hotel project early, having bought out its Canadian joint venture partner for a purchase price of $403 million, has already started redeveloping the 12-storey building to include a mix of condos and hotel space.

The company, which is still in the designing phase of the building, disclosed that the top four floors will be 36 apartments and 6 penthouses, while the remaining floors will have between 150 and 180 hotel rooms. The company has converted the ground floor into office space and has rented it to the government-owned Accountant General Department.

On the last lower floors will be typical hotel amenities, indoor-outdoor restaurant and bar, commissary and coffee shop, movie screening, meeting rooms, spa and gym and rooftop swimming pool.

“GraceKennedy, as you know, is building a new head office in Downtown Kingston, the Government of Jamaica is building a new Ministry of Foreign Affairs, Digicel has their national headquarters there and there are a number of other developments taking place Downtown that we think augurs well for the future of Downtown Kingston and not only do we want to be part of it, we want to lead it,” he continued.

Hanworth said that while there are risks to operating a section of the building as a hotel, the company is doing everything it can to manage that risk while ensuring it delivers a strong return to shareholders. The building will be renamed the Caribbean Place, but the chief operating officer was still tight-lipped on the international flag it will carry, noting that the company is in the negotiating process.

Despite the concerns, PanJam remains bullish on the prospects for the real estate market.

In 2017, the company acquired the office building on 8 Olivier Road and anticipates that completion of the Constant Spring Road roadwork should bring superior returns.

"It's a premium office building with world-class tenants. It's in an area that continues to perform well for us. Manor Park Plaza develops superior returns, because of the variety of retail options for surrounding residential neighbourhoods. We expect occupancy to remain high, particularly after completion of the Constant Spring Road works initiative," the COO said.

More recently, PanJam acquired six acres of undeveloped lands in Freeport, Montego Bay. The company touts the transaction as strategic, being adjacent to the cruise terminal and near the growing BPO sector.

Previous reports from the company suggest it will be replicating the Courtyard by Marriott hotel brand in Montego Bay.

“It widens our real estate portfolio and it gives us exposure outside of Kingston. We are currently developing the master plan for this property, which will include a business hotel. We have experience in this space and plans to capitalise on that,” PanJam's Vice President of New Business Development & Strategy, Joanna Banks said.

PanJam currently owns a third of the Kingston-based Courtyard by Marriott Hotel. The company noted that during its second year of operation, profitability of the hotel significantly increased, moving PanJam's share of profit from $ 27 million in 2016 to $76 million.

Lessons learned from the Marriott investment, Hanworth said, will be used to grow the company's exposure to hospitality, primarily in Jamaica.

“We like the business hotel space in particular, we are starting to understand it a little better and we think it can be a real driver of growth for us,” Hansworth said.

PanJam also controls 20 per cent in Miami-based hotel Aloft, which opened about a year and is already exceeding performance expectation. Other real estate investment include Canada and New York, which the company says help provide diversification across geography and property types in addition to global knowledge to enable future growth.

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