FirstRock Real Estate Investments Limited at the end of its third quarter period ended September 30, 2024 registered a loss of US$674,536 as its business continue to be depressed by the high-interest rate environment.

Nine-month losses for the group, which grew to US$1.4 million, was also almost US$496 million more than that incurred for the similar period in 2023.

Owing to higher policy interest rates by the Bank of Jamaica, which moved from a historic low of half a per cent (0.50) since October 2021 to the current 6.5 per cent, the company has been realising lower property income as pressure continues to weigh down property values resulting in a softening of the market.

As per the company’s latest financial filing, property income for the three-month period totalled US$49,056 while that over nine months was US$1,916,074 — down from US$1.1 million and US$4 million, respectively.

The construction industry, which boomed in the earlier part of the novel coronavirus outbreak, has in the last few years recorded steady decline in output as building activities ease. For the just completed July to September quarter, out-turns for the sector, according to Planning Institute of Jamaica (PIOJ) preliminary estimates, reflected a decline of 2.8 per cent.

“The group’s financial performance continues to reflect the impact of the ongoing high-interest rate environment in Jamaica, which exerts downward pressure on property values, resulting in lower property income relative to prior year. The results were driven primarily by unrealised foreign exchange losses on translation of foreign currency denominated liabilities, which amounted to US$72,034 for the three months ended September 30, 2024 and US$275,170 for the nine months ended September 30, 2024,” the company’s Chairman Norman Reid said in notes accompanying the financials.

“To mitigate the impact on the bottom line from reduced revenues, the Group managed to reduce its overall administrative & general expenses by 20 per cent to US$2,274,250 for the nine months ended September 30, 2024, compared to the same period in the prior year. This cost management effort is part of our ongoing strategy to mitigate the impact of reduced revenues on the bottom line,” the report to shareholders also said.

Despite the challenges, Reid, in expressing optimism, however, said that the group remains committed to delivering growth even as it grapples with the challenges of the macro-economic environment and real estate sector.

“During the quarter our subsidiary, FirstRock Capital Cayman, entered into an agreement to acquire a fully tenanted investment property in Grand Cayman. As the largest acquisition in our portfolio, this property is poised to notably enhance our rental income stream, reinforcing our expansion across the region. Alongside this achievement, our two KFC locations in Costa Rica continue to deliver stable rental income under long-term lease agreements, with plans underway for additional site developments,” the chairman said in outlining some positives for the group.

“By continuing to execute on our portfolio rebalancing strategy, which focuses on acquiring high-yield, income-generating properties across Latin America and the wider Caribbean region, we have built a resilient foundation that supports sustainable growth,” he added.

Banking on the successful execution of its rebalancing strategy through which it aims to dispose of variable income and underperforming residential and commercial properties to acquire more fixed income commercial properties with strong tenants, Reid said the group is looking forward to “finalising additional acquisitions across the region”, several of which he said are now being looked at as promising opportunities and are in advanced stages of negotiation.

“The group remains committed to unlocking value through strategic investments, which we believe will yield substantial long-term benefits to our stakeholders,” he said.