First Rock makes first foreign acquisitions - Plans to list on JSE by year end
Ryan Reid, president and CEO of First Rock Capital, is set to travel to Costa Rica this week to oversee a residential transaction in that country valued at US$3 million.
Pierre Shirley, vice-president in charge of real estate business, is in Guyana overseeing another deal.
Those excursions follow disclosures by the company last Friday of the purchase of five residential units in West Bay Cayman and two units in a luxury high-rise in Brickell, Miami, in the United States – acquisitions into which First Rock has pumped US$4 million.
First Rock hung its shingle in 2018 as an investor in income-producing real estate and other companies. Since then, it has executed deals worth close to US$20 million inside and outside Jamaica, and has earmarked funds for other investments.
The start-up investment company, which has committed 80 per cent of capital to real estate projects, is also preparing to go public and list on the main market of the Jamaica Stock Exchange by year end, Reid disclosed.
The current round of deals is First Rock’s first outside of Jamaica.
“We are informed by our capital allocation limit for each jurisdiction. Guyana is a jurisdiction on our radar,” said Reid. “We will only deploy capital in economies or jurisdictions that exhibit economic growth. There are certain places you won’t see us, for instance, like a Barbados.”
He did not elaborate, but Guyana has struck oil and is expected to grow its economy as a result, while Barbados is in economic crisis and attempting to reform its economy.
Reid said First Rock was reviewing a pipeline of US$100 million in prospective deals.
In March, the company raised $2.5 billion of capital from private investors, which translates to US$19.8 million. Its financing deals since then have included a mix of debt and equity.
“Looking at the opportunities now on the table, we have quite a few. Our pipeline is now at US$100 million,” said Reid. “What it allows for us is to cherry-pick opportunities. It’s a good problem to have. We have more opportunities than money.”
The pending initial public offering (IPO) of shares in First Rock will give the company additional capital for project financing.
“That process we expect to take a couple months. The details of that we are deliberating on internally. But that process is to commence soon,” he said.
The company is yet to select a broker to arrange the offer. As to the IPO target, Reid said that would be determined by the company’s pipeline of deals and was yet to be finalised.
The investment in Cayman was done through subsidiary First Capital Cayman Limited. The residential complex is under construction and scheduled for completion in February 2020.
The acquisitions in Florida were made through First Rock USA LLC.
First Rock’s foray into Miami comes as another Jamaican real estate company, Kingston Properties Limited, is reducing its footprint in that market.
Reid acknowledged the withdrawal but noted that First Rock, a company he co-founded, sees geographic diversification as important to its business strategy and sees opportunity in the United States market.
“We, being a new entity, one of our objectives is cross-jurisdictional exposure as a part of our risk-mitigation strategy,” he said.
“The US market is mature, sophisticated and predictable. Our acquisitions are primarily based on cash flows and not speculation on appreciated values.”
Inside Jamaica, First Rock is weighing two private-equity transactions in the financial services sector. At least one should close before year end, Reid said.
Its local real estate portfolio is weighted towards commercial holdings, with limited residential holdings restricted to the luxury short-term rental market and property bought pre-construction for capital appreciation.
The first commercial property, located near Half-Way Tree in Kingston, was acquired for US$3 million and is fully tenanted, said Reid, who declined to name the property, saying it would disclose the identity of the seller.
“The return on equity for that is just north of 10 per cent,” he said.
First Rock has also purchased a 1.5-acre property in Barbican, Kingston, and has hired contractor Relmac Construction Company to construct a four-to five-floor commercial building to be marketed as office space. The project is valued at US$5 million and due for delivery in 18 months, Reid said.
Three luxury villas on the north coast were purchased for just under US$1 million. Five residential units – luxury townhouses and apartments – were acquired pre-construction in Barbican for more than US$2 million and are due for completion in 2020.
Reid said that the two private-equity transactions being pursued would give First Rock a majority stake in each company.