Financing delays Pan Jam hotel to 2013
Steven Jackson, Business Reporter
Property conglomerate Pan-Jamaican Investment Trust has pushed back the timeline for construction of its Kingston based Marriott/Courtyard hotel to 2013, citing contractual and financing delays.
Concurrently, the group reported losing up to one-third of its coffee crop due to Hurricane Sandy. But it still expects subsidiary Mavis Bank Coffee Factory to meet its selling commitments.
The hotel plans were initially announced in 2009 with the purchase of lands in New Kingston by the Facey family-controlled group.
"It is not on hold. There are a lot of challenges that have to be resolved. The finalising of financing and the contracts are taking longer than anticipated," Pan Jam President and CEO Stephen Facey told Wednesday Business. "We expect to get started in the first quarter of 2013."
In 2009, Pan Jam paid J$454.5 million for lands in an area known as Knutsford Park, which stretches from Knutsford Boulevard to Oxford Road. Construction was initially expected to begin in 2010 but the building permit from the National Environment and Planning Agency was only granted in March 2011. Pan Jam subsequently set sights on a June 2012 construction date with completion in 2014.
IMF not a Factor
Facey dismissed the pending International Monetary Fund agreement as a factor in the hotel project's delay.
"I am not aware that the IMF deal is a specific challenge to our hotel project," he said. "But we expect an agreement, and the sooner the better it will be for the country."
Marriott will manage the property to be developed by Pan Jam subsidiary Jamaica Properties and three foreign partners, Moutte Capital Limited of Trinidad & Tobago, and Costa Rican companies Promerica Group and Caribe Hospitality.
Facey in March revealed a US$20 million (J$1.8b) price tag for the hotel but on Tuesday declined to reconfirm the project cost.
The hotel investment coincides with the conglomerate receiving a US$17.5 million loan from the financing arm of the World Bank, International Finance Corporation (IFC). But the hotel will have its own financing, said Facey.
"Pan Jam received the IFC funds for specific projects and acquisitions. The hotel project will have its own financing with a mixture of debt and equity," he said, but declined when asked to list local or overseas bankers involved in the process.
"We will put one-third of the equity of the project," he said of the planned 130-room hotel. "Nothing of the project has changed."
Pan Jam profits up
Pan Jam, owned 43 per cent by the Facey family, has holdings spread across real estate, financial services, retail and manufacturing and insurance.
The group earned J$519 million net profit for its third quarter ending September 2012, or about 14 per cent higher than year-earlier levels. The directors attributed the rise to the continued high occupancy in its real estate portfolio and favourable results from its associates, including cash cow Sagicor Life Jamaica; Hardware & Lumber Limited; and New Castle Company Limited, owners of Walkerswood and Busha Browne.
"We are very encouraged by strong results from our newest investments in Mavis Bank and Chukka this year, and although early indications indicate coffee crop losses of 25-30 per cent, we are hopeful of securing sufficient product to fulfil anticipated overseas demand," stated Pan Jam's financials.
Last year, Pan Jam paired with conglomerate Jamaica Producers Group to acquire Government's stake in Mavis Bank Coffee Factory, the largest processor of Jamaica Blue Mountain coffee.
The planned development in New Kingston will compete with other hotels, including Jamaica Pegasus, Wyndham Kingston, The Courtleigh, and Spanish Court Hotel.
Sandals Resorts International, operator of Sandals and Beaches hotels, also plans to develop a New Kingston property to be called Sandals City.