different Capital (different with a common “d”), a Kingston-based real estate brokerage, is preparing to launch a novel financial structure that would allow retail investors to buy shares in a single commercial property, testing the appetite of Jamaicans, locally and in the Diaspora, for fractional ownership of real estate.

The company, co-founded by financier Christopher Williams and businessman Gary Matalon, is awaiting approval for its real estate brokerage licence ahead of a plan to raise US$6 million ($960 million) next month. The capital will finance the acquisition of a commercial property — a plaza — that the firm intends to list as a standalone public company, fractionalising the entity into shares for small investors.

Williams, the company’s chairman and CEO, calls the structure a Property Public Offering (PPO). The novel model promises to unlock Caribbean real estate for retail and Diaspora investors via the Jamaica Stock Exchange but concentrates their capital — and risk — into one building’s fortunes.

The core proposition of different’s PPO is its ability to lower the traditional barriers to commercial real estate investment. Williams, who previously co-founded the private equity firm Proven, is positioning the PPO as the next phase in “unlocking” assets for the average Jamaican and the financially significant diaspora.

Echoes of Proven model

Williams is targeting a specific gap in the market, noting that “investment in real estate is low” within individual portfolios, which are dominated by fixed income and equities.

“We obviously did well with Proven and unlocked the private equity space and revved up that market. Now we think that, with this structure, we will open up the access to investment properties,” he said in an interview with Jamaica Observer on Wednesday.

He argued that direct ownership of investment properties has been out of reach for most. “Only a small segment of the market can buy individual properties,” he said. “So, there’s a good real estate opportunity. [It could be] a plaza. The plaza is $1 billion, you understand me, or $300 million. That is 0.1 per cent of the market that can even consider buying that with a mortgage and so on.”

The PPO model aims to solve this by creating a separate company for each property, where investors buy shares.

“You buy shares in the company, and the company only owns this plaza,” Williams explained. “So each listing would be a different company. Each listing is a single property.”

Targeting the Diaspora dollar

The first PPO, targeting a fully tenanted plaza in a yet-to-be-named location with a projected net yield of around 7.5 per cent, is designed to appeal directly to income-focused investors. Williams was clear that this initial property has “no debt” and that “the full rental will be paid over to the owners in dividends every quarter”.

A key selling point is that the rent is collected in US dollars, with dividends to be paid quarterly in the same currency. This offers a hedge against local currency volatility for Jamaicans and a straightforward, dollar-denominated return for the Diaspora in markets like Miami, New York, Toronto, and London, where different plans to establish sales offices.

Williams’ pitch to these overseas communities is direct: “Own a piece of The Rock,” he said, adding that the firm’s agents would soon be “pounding the pavement” in those markets and “blowing up your phones and your WhatsApps”.

He emphasised the stability of Caribbean real estate as an asset class to distinguish it from more volatile investments: “It doesn’t shoot up, don’t double overnight, but also it doesn’t collapse overnight. The standard deviation is very low, so that allows stability and you get a nice rental.”

A concentrated bet

However, the model also represents a concentrated bet. Unlike a diversified Real Estate Investment Trust (REIT), each PPO is tied to the fortunes of a single asset — its tenants, location, and physical condition.

Williams concedes the focus is narrow, stating: “It’s a single property.”

While he touts the “great location”, “long-term contracts”, and that it’s “fully tenanted” with “various tenants”, the success of the investment is inextricably linked to that one property’s performance.

This stands in contrast to his view of a primary home, which he sees as “primarily for consumption. It’s not so much for return”. The PPO is explicitly for the latter. “It’s not real estate primarily for consumption; it’s real estate for investment that you’re looking for a return, whether it be a cash return and/or a capital appreciation return,” Williams stated, defining the asset class he is targeting. “So that’s the market we’re going after, and then we’re only selling properties that we recommend.”

The company sees this as the beginning of a series of such offers.

“We will be doing multiple listings over the next couple of years and multiple capital raise as well,” Williams said. The vision is to allow investors to build a custom portfolio of fractional property holdings. “So you can buy into a plaza in MoBay, then you buy into an office building in Kingston, then you buy into a hotel in Cayman, and so on,” he said.

For Williams, different is a targeted play on a specific gap in the market.

“The focus has been primarily on residential properties, providing shelter for a lot of the Jamaicans, and that’s fine,” he said. “But there is also, of course, just building your personal wealth, and using real estate as one of the asset classes to do that, and so that’s what we’re locked in on,” he told
BusinessWeek.