No significant impact from St Lucia new tax laws — KPREITWednesday, June 23, 2021
Kevin Richards, the chief executive officer of Kingston Properties Limited (KPREIT), says both the company and its shareholders should not be significantly impacted by new income tax laws from the island of St Lucia, where the company is registered as an international business company (IBC), thereby accessing zero taxation on its earnings.
Kingston Properties subsidiaries include Carlton Savannah REIT (St Lucia) Ltd, whose name was recently changed to Kingston properties, is incorporated in St Lucia under the International Business Company Act.
The property management company pays dividends at one of the highest rates seen locally, including a historic payout of 60 per cent of net profit in August 2020 of approximately US$400,000, which represented 66 per cent and 64 per cent of FFO during the year.
“Based on the opinion we have received from our advisors in St Lucia, taxation of 30 per cent would only apply on income earned directly within St Lucia. Given our organisational structure, we do not anticipate any significant impact for the company,” Richards said. Kingston Properties (St Lucia) Limited is wholly owned by Kingston Properties Limited.
He added, “ However, further guidance notes from the St Lucian authorities on the way forward are still being deliberated and as soon as those are made available we will assess.”
In the year under review, KPREIT made its single largest property acquisition with a 100 per cent leased multi-storey office building in the Cayman Islands (The Harbour Centre) totalling 30,689 sq ft for a consideration of US$10.7 million.
Additionally, the company purchased an approximately 88,000 sq ft warehouse building (East Ashenheim Road) in Kingston's industrial belt.
Richards said the acquisitions moved holdings in the office rental for KPREIT space from 30 per cent in 2019 to 48 per cent in 2020.
They were accompanied by the increase in the rental income generated by the group, up 26 per cent, and the net operating margin attributable to the group, ending the year up 48 per cent.
At year end December 31, 2021, operating profit was US$1.4 million.
For first quarter ended March 31, 2021, group rental income increased 57.7 per cent year on year for the three months ended March 31, 2021 to US$709,695.
The higher year on year revenue was mainly due to acquisition of new properties during the second half of 2020, achieving full occupancy at the Grenada Crescent (New Kingston) property in Jamaica and increases in rents at some properties.
Richards commented on the property market and regional economies, “ While the recovery lag will continue into the second half of 2021, we are confident that global monetary policies will remain accommodative, which augurs well for the future stability of certain asset classes like real estate. KPREIT is well positioned to continue creating value for shareholders.
“Future-ready improvements in our information technology systems, focusing on warehousing and logistics assets, the recruitment and training of new team members to support finance and administration and upskilling across the board to increase expertise to keep up with market developments, all form a part of the strategy going forward.”
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