Sun | Jan 21, 2018

Kingston Properties acquires first Cayman property

Published:Friday | January 13, 2017 | 12:00 AMSteven Jackson
Kevin Richards, CEO of Kingston Properties Limited.

Kingston Properties Limited (KPREIT) has acquired its first property in the Cayman Islands, which it says will offer the company hard-currency and tax-free earnings.

The price of the transaction was not disclosed.

The company also expects to announce the acquisition of an additional property in Jamaica shortly.

The Cayman acquisition executed on January 10, is a fully tenanted, mixed-use building located in the West Bay Beach area.

"The property in Cayman was financed by debt, but we are still underleveraged," said KPREIT Chief Executive Officer Kevin Richards.

Last April, KPREIT raised some US$5 million in loans aimed at financing future acquisitions.

The company will disclose the price of the Cayman acquisition in its first-quarter 2017 earnings report, said Richards. Those results are due for release around mid-May.

The building comprises offices, retail outlets and residences along the famous Seven Mile Beach corridor.

It sits in proximity to hotels, condos and trendy developments.

"Cayman is a tax-free environment with no property, income, corporate and capital gains tax. So the acquisition is part of KPREIT improving our tax efficiency," Richards said.

"Secondly, the economy is rapidly developing since the economic crisis, and there are huge plans for the development of the country. We are not ruling out other acquisitions in Cayman."

Cayman Islands, with a per capita GDP of US$58,856, is described as a leading financial centre, with GDP growth for the first half of 2016 at 3.0 per cent, while unemployment stands at 3.9 per cent.

KPREIT indicated that the fundamentals in Cayman are expected to continue to improve based on the growth in the Special Economic Zone near the South Sound; the planned expansion of the Owen Roberts International Airport; construction of a new cruise ship pier in Georgetown; expansion of the highway in the general West Bay Road area; along with continued resort and condo developments along the Seven Mile Beach corridor.

KPREIT is a real estate investment trust that invests in properties locally and overseas. Its investment holdings are now valued at $2.2 billion, compared to $1.9 billion a year earlier, boosted by new acquisitions. The rise was due to acquisitions of three properties in Florida last year.

For the third quarter ending September 2016, KPREIT made $14 million net profit from revenues of $35.8 million, compared with a loss of $4.5 million a year earlier. Over nine months, the company made $131 million net profit on revenues of $111.8 million, compared to a net loss of $51 million a year earlier.