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Sagicor X Fund reduced holdings to acquire Palmyra

Published:Wednesday | November 15, 2017 | 12:00 AMAvia Collinder
Rohan Miller, CEO of Sagicor Real Estate X Fund.

Chief executive Officer of Sagicor X Fund Limited Rohan Miller said the group has sold down its Sigma portfolio holdings in order to pay expenses attached to the US$90 million acquisition and renovation of the Palmyra hotel in western Jamaica, which opened in September as the Jewel Grande.

The fund was otherwise rewarded, with the Sagicor Group subsidiary reporting a 40 per cent improvement in third-quarter earnings, said to be due to revalued property as well as higher tourist arrivals.

For the quarter ended September, net profit climbed to J$2.36 billion, 40 per cent higher than the September 2016 net profit of $1.69 billion. This was rebounding from second quarter ending June when it saw its half-year profit fell by 30 per cent to $785 million, compared to $1.124 billion the previous year, partly attributable to renovation costs.

Miller said attention will now be focused on consolidation for the next year. He said that year 2018 will be about "consolidation of all operations to maximise efficiency and increase net income. It's about revenue and expense management, and getting more out of the guest experience."

Holdings in the Sigma portfolio now stands at 38 per cent interest, from 46 per cent at December 2016.

The Sigma portfolio has property investments in the tourism sector through full ownership of three of the Jewel Resorts branded hotels, a 56 per cent holding in Jewel Grande Montego Bay, and the real estate sector involving ownership of several office/retail shopping buildings, industrial/ warehousing properties and prime land holdings slated for development.




Nine months' net earnings for the portfolio, based on revenue of $9.76 billion - of which $5.81 billion was earned by the Jewel hotels - was $3.96 billion.

The overall results for the period for Sagicor X Fund were credited by directors to the performance of the hotels and restaurants industry, which grew by an estimated eight per cent from stopover arrivals, with visitor spend of US$671 million, up 8.5 per cent year-on-year.

The directors said that otherwise, the results were due to appreciation and realised gain of $2.146 billion from investment in Sigma Fund units, linked to the revaluation of the Jewel hotels and Northern Estate.

There was also a $254-million gain on the revaluation of direct investment in the Palmyra, now Jewel Grande.

The directors said the Hilton DoubleTree, the fund's hotel in Atlanta, Georgia, United States, had year-over-year growth of 10 per cent and 13 per cent, respectively, "and confirmed business on the books for the next two months is pacing ahead of budget".

The fund's hotel operation is comprised of two hotels directly owned by the group - the Hilton Rose Hall Resort and Spa and DoubleTree Universal in Orlando, Florida. There are four others which represent partnerships with the Sigma portfolio.

Overall, hotel revenue of $7.7 billion grew by 15 per cent over the $6.7 billion for the corresponding period last year, driven by improved occupancy and room rates.

Management said tighter expense control resulted in a two per cent improvement in efficiency in the hotels. Ongoing initiatives are being implemented to reduce energy consumption and further improve efficiency, management added.

The group had cash and cash equivalents of $1.36 billion, up from $659 million at December 2016.