Kingston Properties, Cemex Jamaica scrap Waterworks partnership - Search under way for new developer
The partnership between Kingston Properties Limited (KPREIT) and developer Cemex Jamaica Limited to create a residential development in Waterworks, Westmore-land, has been dissolved, the real estate investment trust said Tuesday.
CEMEX backed out of the partnership after a new CEO was appointed "who took a slightly different view about the kind of transactions they should get into, so they basically tried to extricate themselves from the MOU that we had signed," KPREIT Chairman Garfield Sinclair told Wednesday Business following the company's annual general meeting in Kingston.
KPREIT was compensated by Cemex Jamaica, but Sinclair declined to divulge the exit fee.
"I think the agreement was an accommodation we came to for carrying us wide essentially," Sinclair said.
Kingston Properties is once again trolling for a land developer to execute the residential project. If a partner cannot be found to deliver the project "within the parameters that we prescribe and that would be very low risk for the shareholders," the company will sell the property, he said.
Kingston Properties wants to develop 105 low-to mid-income homes on the 20-acre Waterworks lands, aimed at tourism workers. The project was initially costed at $700 million.
It will be Kingston Properties' first foray into property development. Its portfolio to date comprises properties acquired in Jamaica and Florida.
Its newest purchases include four condos in The W Fort Lauderdale, five condos at the Midblock in midtown Miami, and three condo units at Opera Tower in the downtown Miami area.
"These areas represent the new thrust in residential living in Miami with construction of newer condominiums units to a more discerning market," the company said.
The W Fort Lauderdale is a part of the Starwood Hotel Group and allows the company to "participate in a higher-end product to diversify away from its other holdings in Florida," the company said in its annual report.
The Opera Tower condos were acquired for US$5.5 million, the company said.
The purchases were financed from a mix of loans, proceeds from the sale of the units at Little Havana and funds raised from a rights issue during the year.
Kingston Properties has been raising funds, including debt, to finance its ongoing acquisitions and projects. In April, the company announced that it raised US$4.5 million.
Pressed ahead of the AGM on plans for the use of the funds, newly minted Chief Executive Officer Kevin Richards said only that the company was "actively seeking new projects".
"We are doing the assessment process now to find a new project," said Richards, who was appointed CEO last November.
Shareholders were also advised at the AGM that Kingston Properties will go back to the market this year to raise more funds.
A breakout of the rental income of the company's property portfolio shows the Red Hills Road complex contributing $47 million in 2015; the Loft 11 condos, $34.6 million; apartments at 555 4th Street in Miami, $20 million; and the new Midblock and W Fort Lauderdale, $4 million and $1.5 million, respectively.
Kingston Properties posted relatively flat revenue for 2015, closing the year at $108.4 million compared to $108 million in 2014. However, profit for the year turned around from a loss of $1.1 million to a positive $105 million, mainly because of the disposal of two properties during the year - 83 Hagley Park Road in Kingston and apartment holdings in Little Havana, Miami.