Kingston Properties collects US$1.5m from Florida condo sales
Kingston Properties Limited, which trades under the symbol KPREIT, has completed the sale of four condo units in South Florida and is setting aside proceeds for acquisitions in Jamaica and Cayman Islands in deals that are close to consummation.
Kingston Properties sold two units at the Loft II and one each at Midblock and the W. Fort Lauderdale. The company did not disclose the sale prices, but noted that so far this year, it has collected US$1.5 million from five units sold in that market.
CEO Kevin Richards said the proceeds will finance the new acquisitions that are expected to be announced in a "couple of weeks".
Kingston Properties' reduction of its Florida footprint is a deliberate strategy by the Jamaican company, due to changing conditions there.
Interest Rate Hikes
Richards told the Financial Gleaner that hikes in United States interest rates were having a negative effect on the property market in that country.
"More developed real estate markets like the US tend to be more correlated with the direction of interest rates. With the hikes in benchmark interest rates in the US and the plans for further hikes, some segments of the real estate market have been softening as anticipated, and a decision was taken
to reduce the level of concentration in the South Florida condo market," he said.
"Additionally, there has been a certain degree of overbuilding in that market in recent years which has increased inventory in that market, hence moderating prices."
Kingston Properties has been measuring market risk and using its assessments to determine when to sell. The company looks at indicators such as months' supply of inventory, median time to sale, average and median sales prices, employment data and housing trends, he added.
In the markets that the company is now investing - Jamaica and Cayman Islands - the indicators are more positive.
"The macroeconomic fundamentals and outlook in those two markets are fairly strong and we have been able to find attractive properties in those markets in recent times," said the Kingston Properties CEO.
In both markets, he added, units owned were 100 per cent occupied, while occupancy rates in the US was approximately 82 per cent.
In May, the company had indicated that new acquisitions would be financed by proceeds of unit sales as well as a US$800,000 loan facility with Terrabank NA in Florida.
With the latest sale, Kingston Properties now owns 11 units in its three markets. Its sole property in the Cayman Islands is a mixed-use building in the West Bay Beach South area.
Its other properties include a commercial complex on Red Hills Road and warehouse facilities on Spanish Town
Road in Kingston, together amounting to more than 100,000 square feet of space.
Properties in the United States include condos in the Loft, five residential units on NE 1st Avenue in Miami, condos in Bayshore Fort Lauderdale and North Bay Shore Drive in Miami.
No update was provided on the pending acquisitions, but Richards said previously that properties being eyed for purchase were commercial, tenanted and cash-positive operations.
The company now earns 49 per cent of its income from its US portfolio. Kingston Properties made a profit of $26 million on revenue of $50.5 million for its second quarter ending June. Profit rose by a third relative to the 2017 period.
The company's assets were estimated at $2.67 billion and its book value $1.78 billion at the end of June.