SYGNUS Real Estate Finance (SRF), the specialty real estate investment company of the Sygnus Group, chalked up a loss of $99.95 million during its first quarter (Q1 2022) as a publicly traded company.
This represents a decline from the net profit of $25.24 million recorded during Q1 of 2021. During the first quarter ended November 2021, SRF, which has been operating for a little over two years, attributes the net loss in Q1 2022 to the timing differences in the unlocking of value from real estate investment assets versus the interim carrying costs deployed in unlocking that value.
During the quarter under review SRF's investments were allocated across nine sub-categories of real estate, with the largest allocation to hospitality — investment property with 32.0 per cent (Mammee Bay), industrial investment property with 24.0 per cent (Lakes Pen Holdings), and commercial investment property with 16.0% (includes former French Embassy).
The management has pointed out that, “SRF is still in the early stages of its investment life cycle, which averages three to five years. Thus, given the diversification and quality of its real estate investments — spread across hospitality, industrial, commercial and residential assets — there is substantial additional value to be realised from these assets over the next two to three years.”
Despite the novel coronavirus pandemic and disruptions in the logistics supply chain, SRF has significantly advanced its various real estate investment projects across the island such as the Spanish-Penwood warehouse project in St Andrew, the One Belmont commercial office project in St Andrew, and residential investments such as Ocean's Edge in Discovery Bay in St Ann, Norbrook Wasser in St Andrew, and Surreal at the Sugar Mill in Montego Bay, St James.
Executive vice-president and chief investment officer at Sygnus Group, Jason Morris explains that, “The residential investment projects are substantially completed and are either sold out, under contract or seeing substantial demand. In the short to medium term, SRF will continue to explore new opportunities to add further diversification to its investment portfolio, including regional opportunities outside of Jamaica. SRF continues to monitor and mitigate emerging risks in the real estate sector to protect shareholder value, and remains optimistic about its current diversified real estate portfolio as a medium for shareholder value creation.”
In spite of the novel coronavirus pandemic, SRF is seeing very strong demand from marquee corporate clients for long-term lease of floors and is currently negotiating letters of intent with a number of these prospective tenants. The 32,553-square foot Spanish Penwood industrial warehouse project, which will be the new headquarters for IMCA Jamaica, the agents for the Caterpillar dealership, was 17 per cent completed and on track for a July 2022 completion.
SRF is currently at the schematic and detailed design phase of the value creation process for the Mammee Bay investment property in St Ann, being led by a world-renowned international consortium of architects, engineers and professionals in the hospitality industry, with the next key decision date set for May 2022. The master plan and feasibility study for the Lakes Pen industrial properties in St Catherine were completed, and SRF is about to embark on the detailed design phase led by a prominent, international group of architects, engineers and professionals in the industrial industry.
The company completed the US$6.5-million purchase of the 3.2-acre former French Embassy on Hillcrest Avenue in St Andrew during Q1 2022 and is working with its partners to optimise the strategy in order to unlock the optimum value from this real estate asset.