KPREIT steps up search for properties in UK
Heading to market soon for more cash
Published:Friday | June 14, 2024 | 12:10 AMLuke Douglas - Senior Business Reporter
Kingston Properties Limited, which trades as KPREIT, has stepped up its search for properties in the United Kingdom as it seeks to further diversify its real estate assets beyond markets in the Caribbean and the United States.
CEO Kevin Richards says the company is focusing on acquiring properties for renovation and rental rather than developing projects from scratch, saying the latter strategy takes too long to realise handsome profits for KPREIT’s shareholders.
“We are looking for opportunities in the UK; we continue to scout using that market and we are hoping to close on a transaction there soon,” Richards said at the company’s annual general meeting held in New Kingston on Wednesday.
“We are widening our reach by moving outside of the hurricane belt. The UK is a market we are very bullish on,” the CEO added.
While taking note of the upcoming general elections in the UK, set for July 4, Richards said he expects the Bank of England to lower interest rates later in the summer, after which, he added, “we are likely to see some turning in the commercial real estate market”.
The CEO said KPREIT would be focusing on its core strategy of acquiring distressed properties – that is, properties the owners are having difficulty holding on to because of outstanding debt – for rental to new tenants, rather than greenfield projects, that is, developments on land where there has been no previous construction.
“We have always done well when we have acquired distressed assets and added them to our portfolio,” said Richards.
“We are going to be doubling down on our core investment strategy, which is to target immediate cash-generating properties with high returns in US dollars. This means de-emphasising greenfield projects and real estate partnerships. Those take a long time to get to cash flow, which is a critical part of our business. We want to be known as that company that pays consistent and high-paying dividends to our shareholders,” he added.
The group’s performance for the quarter ended March saw a 29 per cent increase in rental income over the corresponding quarter in 2023. Rental income for the three months was $1.11 million, compared to $859,924 for the same period in 2023.
The higher year-on-year income was mainly due to the addition of 36 units at the Grand Harbour Commercial Centre in the Cayman Islands, combined with higher occupancy levels during the current quarter and higher rental rates at the company’s other properties in Jamaica and Cayman.
KPREIT’s 2023 annual report showed rental income at a record US$3.8 billion, while net profit stood at a record US$4.6 million.
The company has 462,000 square feet of space under management and 112,000 square feet of land under development.
A breakdown of property holdings by location shows Cayman Islands leading with 55 per cent of total holdings, Jamaica at 38 per cent, and the United States at seven per cent.
Chairman of Kingston Properties Garfield Sinclair indicated that the company will go to the capital market soon to raise the funds needed to reach its target of US$100 million in assets by 2025.
“We have a goal to get to US$100 million in assets and for us to move from the US$72 million that we are at now; obviously, we are going to have to use the capital market to expand the portfolio,” Sinclair said.