Byles takes the helm at 138 Student Living
Real estate company 138 Student Living Jamaica has its eyes on education tourism as an avenue for growth.
That's according to past chairman and company founder John Lee, who last Friday gave up the leadership of the board to Richard Byles. Lee, who was chairman for five years since the company's inception, said it was time for new leadership - reaffirming a message in a market notice about the board changes.
Byles, who is also the chairman of Sagicor Group Jamaica Limited, takes a seat on the board that was previously held by another Sagicor appointee, Donnette Scarlett.
The insurance conglomerate holds the largest block of shares in 138 Student, amounting to 40.47 per cent of the company. Through K Limited, Lee and his wife Marrynette Lee control the next largest block of shares totalling 32.98 per cent, according to the most recent disclosures in March.
Lee's legacy includes two concession agreements with primary partner University of the West Indies, Mona, but recently he had been signalling that 138 Student Living wanted an adjustment to the housing deal.
Asked whether that would form part of his focus as the new chairman, Byles avoided the question altogether, saying he was yet to have his first board meeting and could not comment.
Lee himself said there were discussions under way with UWI Mona on changes to the financial model used for the concession agreement. But he mostly focused on the prospective business that resides outside Jamaica, when asked about the company's future direction.
"Richard is one of the most Iconic leaders we have today in Jamaica and I could not think of a better visionary to take charge. There are a few big ticket items that Richard is best placed to deal with, including Jamaica recognising the importance of education as a tourism subsector," he said.
"In countries like St Kitts and Grenada, educational tourism contributes a significant percentage of GDP; obviously, it would also contribute in a positive way to our business model. I can think of no better person to lead this initiative than Richard."
138 Student Living manages 1,800 beds at UWI Mona, but while occupancy levels have improved over time, the performance of the concession was not up to expectations.
In the March quarter, Student Living operated 1,464 rooms with average occupancy of 94 per cent, an improvement on the 1,080 rooms operated at the same point in March 2017 when occupancy was 75 per cent.
GROWTH OF REVENUE
Revenue grew 55 per cent as a result, but as Lee noted in the company's financial report for the quarter, top-line income "continues to be less than optimum as the approved rental rates for the latest development was less than agreed as contained in the concession agreement."
On Tuesday, Lee, who remains a member of Student Living's board of directors, said he would address reports of an increase in fees implemented by the company, at a later date.
MATTERS UNDER DISCUSION
He said the issue of the increase as well as "the negative effect" on Student Living's income were matters under discussion with UWI Mona.
"An outcome from these discussions so far is a review of the financial model, which is an integral part of the concession agreement. It is expected that from the review there will be an adjustment in the accounts which will positively impact revenues and overall profitability of the group," he said.
"After five years of operations there are a few items, as expected, that require fine-tuning, which are being worked on by both UWI and 138. These are normal issues that surfaced in operationalising the concession agreement," he told the Financial Gleaner.
The concession agreement runs for 30 years, with a potential renewal for another 35 years.
On a bullish note, Lee said the company was enjoying good brand recognition and that occupancy levels are the highest they have ever been.