Fri | Aug 18, 2017

Pan-Jam to decide whether to fly Marriott flag downtown

Published:Friday | May 13, 2016 | 5:00 AMSteven Jackson

Property conglomerate Pan-Jamaican Investment Trust will shortly receive a consultant's report to aid its decision on whether to brand the former Oceana as a Marriott.

But the company also has other international brands under consideration, among them Starwood, whose parent, incidentally, Marriott is in the process of acquiring after besting a rival Chinese bid from Anbang.

Pan-Jam's newly built hotel in New Kingston, a joint-venture investment with Costa Rican partners, already operates under a Marriott brand - Courtyard. Pan-Jam also has a minority stake in a project to convert offices into a Starwood-branded hotel in Miami.

"Yes, Marriott, and also Starwood, would be an obvious brand/flag we would approach, given we already have a relationship with them. Pending the results of the study, we will assess which other flags would be a fit and may approach them at that time," said Pan-Jam chief financial Officer Paul Hanworth via email.

"The study will suggest to us the flag/brand of best fit. It is by no means a foregone conclusion this would equate to a Marriott or Starwood brand, but given their global muscle and experience as well as brand range, I have to believe they would be a strong contender," he said.

Renovations ongoing

Pan-Jam and its Canadian partner, Downing Street, acquired the former Oceana Hotel on the Kingston waterfront in late 2014 for $385 million. Through a joint venture called Kingchurch Property Holdings, the partners are spending an undisclosed sum on Oceana's redevelopment, and have so far renovated the ground floor. The space has been leased for occupancy at midyear.

"We have some preliminary estimates, but since we have just embarked on a detailed feasibility study it would be premature to quote numbers, pending a much clearer and more grounded view of the finished product," said Hanworth on the cost to develop the property.

The rest of the building will be developed as a hotel "with a residential component", the company said in its annual report to shareholders.

"We are trying to understand the optimal mix of hotel rooms, extended stay and condominium units," Hanworth told the Financial Gleaner. He said another element of the study involves whether to hire a third-party management company for the hotel.

"So, once the study is complete, we should have a good idea of the route we will take," he said.

A return to hospitality

The New Kingston hotel, which opening in December 2015, marked a return to the hotel market for Pan-Jam, which held investments in Sans Souci hotel decades earlier.

The conglomerate earns most of its revenue from its

core business of property management, but the bulk of its profits comes from investments in associate companies.

In 2015, group revenue, at $1.89 billion, dipped slightly from $1.9 billion a year earlier. Core property revenue slipped from $1.55 billion to $1.48 billion, due in part to the departure of a 'prominent' but unnamed tenant from space in New Kingston. Profit that year amounted to $3.25 billion, up from $2.85 billion the previous year.

Pan-Jam continues to extend its reach outside Jamaica with increasing investments in North American markets. Real estate investments in the United States and Canada now surpass $900 million.

In April, the company mapped out four real estate investments overseas through various subsidiaries and partners. They include a 20 per cent interest in the Starwood-branded business hotel development, close to the Miami airport, that is expected to open at the end of 2016. The investment was made through PJ-AL Corp, a subsidiary incorporated in Florida in 2015.

The conglomerate is also in a limited partnership, which invests in New York commercial and residential property.

In Canada, it is invested in two ongoing real estate projects, through Downing Street Fund II and Downing Street Fund V.

At Pan-Jam's upcoming AGM on May 26, the company will tell shareholders that it is still on the hunt for hotel acquisitions or investments, both in Jamaica and the region, but that it plans to avoid the all-inclusive sector a market segment it believes is already "well-served".

Otherwise, it will also seek shareholder approval for a five-way split of the company's authorised shares, to increase its capital from 250 million to 1.25 billion shares, at the existing stated capital of over $2.14 billion.

steven.jackson@gleanerjm.com