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Student Living double listing makes number 70 for JSE

Published:Wednesday | December 31, 2014 | 12:00 AM
File John Lee, chairman of 138 Student Living Jamaica Limited.

Property developer 138 Student Living Jamaica listed its ordinary and preference shares on the main market of the Jamaica Stock Exchange (JSE) in mid-December, making it the 70th company to do so.

The company earlier raised more than $500 million in an initial public offering (IPO).

Jamaican Money Market Brokers (JMMB) Securities Chief Country Officer, Karl Townsend said the offer was taken up by pension funds and other institutional investors, among others.

The IPO, aimed at raising $562.9 million from a float of ordinary and redeemable preference shares, was brokered by JMMB Securities and underwritten up to $400 million by JMMB.

The offer included 98.6 million ordinary shares priced at $4 and 33.68 million floating rate preference shares at $5 each.

The floating of 138 Student Living shares was to satisfy arrangements with primary lender Jamaica Mortgage Bank, which is backing a portion of the $1.3-billion construction cost of 576 units on the Mona campus of the University of the West Indies.

A second set of 576 dormitories is slated for completion in September 2016, and the remaining 432 units by August 2017. Total cost of the construction is $4 billion.

The units will be built and operated under a 30-year concession between the UWI Mona and K. Limited, the founding company and parent for 138 Student Living, to which it has transferred its rights.

138 Student Living will pay no dividend to shareholders until the student housing project is complete, but as of 2018 the company expects to start paying annual dividend on its ordinary shares, equivalent to 95 per cent of net profit after debt servicing and funds for routine maintenance have been set aside.

Dividends on the preference shares will be paid at the six-month Treasury bill rate plus three per cent until maturity in 30 years.

The UWI has guaranteed 90 per cent occupancy of the constructed units in any 51-week period for as long as a concession agreement between the university and Student Living is in place. The parties have the option to extend the concession from its initial 30 years to 65 years.

The concession allows 138 Student Living a 15 per cent real rate of return by the end of the concession period, calculated on the cash equity amounts to be invested by shareholders, about $767.17 million based on a successful IPO.

Parent company K. Limited has been involved in construction for more than 10 years and has done apartment complexes in Kingston, according to Chief Executive Officer John Lee.

JMMB's Townsend said at the listing earlier this month that other companies should be "looking to the equities market for financing as equity capital offers more advantage to businesses than debt financing," and that the brokerage was targeting more IPOs and listings for 2015.