Sat | Jan 25, 2020

Pulse taking on residential market after debt raise

Published:Friday | January 10, 2020 | 8:42 AMKarena Bennett - Business Reporter
Chairman of Pulse Investments Limited, Kingsley Cooper.

Pulse Investments Limited has raised $250 million through a global note issue in December which it will use to complete the Villa Ronai suites expansion project, and cut a pathway into the residential real estate market.

The modelling and hospitality company is currently developing 68 guest suites at Villa Ronai from which it hopes to generate approximately US$2.5 million (J$350 million) in annual revenue, possibly pushing the company over the $1-billion revenue mark by the fiscal period ending June 2021.

For its 2019 financial year, Pulse recorded revenue of $620 million plus gains and other income of $440 million, which pushed profit to $653 million, a four-year high for the company.

The first phase of the Villa Ronai development is expected to be commissioned into service in summer 2020. On completion, Pulse Executive Chairman, Kingsley Cooper is aiming for an occupancy level of 70 per cent in the first year.

Aside from guests’ suites, Cooper is also looking to tap the residential real estate market with the construction of a new development called Pulse Homes. Both developments are slated to be housed on the nine-acre Villa Ronai property in St Andrew.

The construction of the residential units is scheduled to begin later this year.

“Pulse’s entry into the residential real estate market is a logical extension of our current real estate business. The availability of unused portions of the nine acres at Villa Ronai and the works currently under way makes this a natural next step,” Cooper told the Financial Gleaner.

“Also, with our build-and-hold philosophy, we’ll benefit from rental income as well as capital appreciation, itself a good hedge against currency devaluation,” he said.

Cooper has already used $65 million of the raised funds to settle existing bank debt. The remaining $185 million will be split between Villa Ronai and the Pulse Homes project, the latter of which is at a preliminary stage and will be apportioned a smaller amount of the funds.

Cooper is contemplating a mix of units for sale as well as units retained for rental for the Pulse Homes development, and intends for the project to be further funded from a mix of internally generated funds, related party funds and debt.

Possible rights issue

On Monday, Pulse, through a notice on the Jamaica Stock Exchange, put forward a resolution to shareholders to increase the company’s authorised share capital from 1.95 billion to 7.5 billion units to be voted on at its annual general meeting in February. It suggests the company could be seeking to raise more funds through a rights issue, one of its preferred modes of raising capital.

Pulse Investments, which began trading on the JSE in 1993, is controlled by Cooper. The business, which has evolved from its core activity of promoting talent in the fashion and entertainment industry over the years, has also managed to marry its fashion know-how with a focus on television, event production and a real estate business.

To date, Pulse’s streamlined business model has evolved into 14 revenue streams for the company. Its real estate portfolio consists of shops, offices, restaurants, accommodations, event venues and hotel facilities.

Pulse Rooms at Trafalgar, a property comprised of 22 rooms that opened for business last March, is the latest development for its real estate business. The accommodation has a 50-year lease agreement from Cooper, who is the personal owner of the property.

Pulse rents approximately 90 per cent of the premises at 38 Trafalgar Road to boutiques, beauty salon operators, offices, other shops, as well as a restaurant and bar at the Pulse Centre.

Pulse Rooms is projected to generate $70 million in annual revenue and is said to be on track to meet project targets over the next 18 months, having performed creditably in the first six months of operation.