Sygnus Real Estate Finance Limited (SRF) is reporting that its J$3.7 billion Belmont Road nine-storey commercial tower, which holds 310 parking spaces and five floors of commercial space, achieved 100 per cent in effective leases for the 78,790 sq ft development.

SRF, a specialty real estate investment company, which uses flexible capital (debt and equity) to unlock value in real estate assets across the industrial, residential, commercial, hospitality and infrastructure segments, made the declaration in its just-released financial results for the nine months ended May 31, 2023.

During the nine-month 2023, the company deployed J$2.82 billion in investment commitments, compared to J$2.42 billion in the corresponding period last year. Total real estate investment assets increased by 27.9 per cent, exceeding J$14.1 billion dollars, while book value per share increased 6.3 per cent to J$21.82.

The company reported that it continued to unlock value from its major real estate investment assets by achieving another set of key milestones.

It noted that the Belmont Road project advanced to 87 per cent completion and was targeting practical completion for September 2023.

The construction of the built-to-suit industrial warehouse facility on Spanish Town Road achieved 99 per cent completion and SRF received the security deposit during the quarter based on a 10-year executed lease agreement, with the first rental payment forthcoming. During the period, the company also made advancements in the planning and designing phase of several strategic assets including Mammee Bay, Monadh Rois, Lakespen and adjacent properties at 56 and 58 Lady Musgrave Road, according to the financial report.

“SRF remains fully focused on executing its strategy of unlocking value in real estate assets and remains committed to increasing shareholder value. In this regard, we are particularly excited about the pending exit from the fully leased Spanish Penwood industrial facility and the near completion of the 100 per cent leased flagship One Belmont commercial tower,” Jason Morris, Executive Vice President and Chief Investment Officer at Sygnus, said.

“The company is currently exiting investments valued at over J$1.80 billion and is in the final stage of execution for projects valued at over J$4 billion. As such, SRF may consider paying its first dividend sometime during the 2023 calendar year depending on the outcome of its financial results towards the end of the calendar year,” Morris continued. “While we are in the process of exiting investments and unlocking value from the major assets on SRF’s balance sheet, we are also looking forward to starting SRF’s first owned luxury residential project in the golden triangle, as we strive to continue increasing book value per share while maintaining the three-year track record of generating a positive return on equity every fiscal year.”

The company reported total investment income or core revenues of J$2.7 million for 9 Month 2023, compared to core revenues of J$60.2 million for the corresponding period ended May 31, 2022. This result was primarily driven by higher interest expense due to the increased use of debt to finance growth in real estate investment assets compared to the previous year. The short-term use of additional debt was used to bridge the forthcoming exit from multiple projects over the course of the next few quarters. SRF reported J$1.35 billion in total investment income for the financial year ended August 2022.

According to SRF, in keeping with previous interim results, its nine-month 2023 financial statements do not reflect the major value creation derived from its business model, namely its investment in developments and investment properties.

“This value is typically reflected at the end of each financial year, or when a project has been completed or fully exited. This results in ‘uneven’ interim financial results which are typically normalised by the end of the financial year when revaluations occur,” the company stated.

Given no material total investment income during the period, net loss attributable to shareholders was J$465.1 million compared with a net loss of J$197.5 million last year, mainly driven by higher interest expense of J$235.0 million compared with J$101.3 million last year. SRF reported J$693.0 million in net profit for the year ended FYE Aug 2022.

As at Q3 May 2023, SRF’s investments were allocated across nine sub-categories of real estate, with the largest allocation to hospitality–investment property with 37.6 per cent, industrial-investment property with 16.5 per cent and commercial-investment property with 14.2 per cent. SRF’s capital was allocated across three investment categories, namely property investments at 76.5 per cent, real estate investment notes (REINs) at 15 per cent, and investment in joint venture at 8.5 per cent.