Stanley Motta value spikes on property revaluation, $4b IPO for Friday
Published:Tuesday | July 3, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter
The revived Stanley Motta Limited, developer of the 58 HWT technology park in Kingston, had no substantial income before last year when it reported rental income of $72 million.
The company, however, reported a large profit of $853 million, nearly all of which - $843 million - related to book gains from revaluation of property at 58 Half-Way Tree Road, as it heads to the market this week for fresh equity capital.
Stanley Motta, which has an all-female board led by Melanie Subratie, aims to raise $4 billion from an initial public offering of shares from July 6-20, priced at $5.31 per share. It will become the fifth Musson-affiliated entity to list on the Jamaica Stock Exchange, assuming the offer succeeds.
The company is offering 757.8 million shares in its IPO, some 69 per cent of which will be available to the general public for subscription.
Stanley Motta re-emerged in 2015, after a period of dormancy, with 58 HWT as its first project. The complex comprises more than 200,000 square feet of commercial space developed for leasing.
In 2016, the complex comprising five building units, was valued on the company's balance sheet at just under $400 million amid a renovation programme. Last year, 58 HWT was valued at $2.35 billion. At the same time, its borrowings spiked from $197 million to $714 million.
The profit booked in 2017 wiped out accumulated deficits of $13 million, and was a prime mover in the dramatic expansion of the company's equity base from $31 million to $1.6 billion.
Stanley Motta is currently exempt from corporate income tax on rental income as the property is a designated free zone under the Jamaica Export Free Zones (Stanley Motta Limited) Order 2015. The free zone law, JFEZA, was repealed in 2016 and replaced with the SEZ regime under the Special Economic Zone Act or SEZA, and the company will be applying to become a developer under the SEZ regime, under which it will be subject to a corporate tax rate of 12.5 per cent on its taxable income.
"Under the SEZ, Stanley Motta will continue to be exempt from corporate income tax on its rental income of property at 58 Half Way Tree Road, but its other income, if any, will be taxable at a corporate income tax rate of 12.5 per cent," IPO prospectus stated.
For the full year to December 2017, Stanley Motta paid $60,000 in corporate taxes on net profit of $853 million. In its March 2018 first quarter, the company generated more than $40 million in revenue and made $10.7 million net profit, with taxation at nil.
The company, which was established in 1948 as a retail chain for electronic appliances, was acquired by Musson in 1983 and went dormant in 1998. In 2016, a year after its revival, Stanley Motta started booking assets as investment property.
The company is held by Musson Jamaica and Harbour Street Properties, a St Lucia incorporated company which is also controlled by Musson. Its all-female board includes chairman Melanie Subratie, Jennifer Scott, Sandra Glasgow, Minna Israel, Patricia Sutherland, Sharon Donaldson and Andrea Kinach.
NCB Capital Markets will act as the lead broker and arranger for the IPO.