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Proven, joint-venture partner to develop apartments

Published:Friday | November 15, 2013 | 12:00 AM
Christopher Williams, president of Proven Management Limited. - File

Marcella Scarlett, Business Reporter

Proven REIT Limited will be signing a joint-venture partnership agreement with a real estate developer by monthend to construct an apartment complex that will be the company's debut real estate project.

At the same time, the company is looking to strike deals on two other property acquisitions that Christopher Williams, president of Proven Management Limited (PML), said are pending.

Proven REIT has already got the requisite approvals for development of the apartment complex in Kingston, said Williams.

He declined to name the company's partner ahead of the contract signing.

The complex will comprise 31 studio and super-studio apartments units. The selling prices have not been finalised, but Williams said the studios would be priced within a range of J$10 million to J$15 million each.

The target market is first-time homebuyers and investors who are looking to diversify their income stream to include rental income.

"A lot of clients have expressed a desire to get into real estate development so there is a need for investment properties; so we expect it to be targeted at first-time buyers and high net worth individuals that want to include real estate for rental income," he said.

The project was initially disclosed in the half-year financial report of Proven Investments Limited (PIL), the parent company and 85 per cent owner of Proven REIT. PML is the investment manager for PIL and its assets.

PIL, which remains the sole stock on the USD-denominated market index, reported net revenue of US$4.5 million for the six-month period to September and net profit of US$2.09 million, a performance that aligned with the HY 2012 results.

Williams said the property to be developed was acquired two years ago for US$400,000. The company is looking to spend approximately J$300 million on the construction, which will be funded from a combination of debt and equity, apportioned in a 3:1 ratio, he said.

"We are in negotiations with our commercial banks to provide us with construction financing. We work closely with Sagicor and NCB, but we don't have anything confirmed yet," said Williams, who formerly ran NCB's wealth company before forming Proven with other partners.

Affordable but liveable

The 31 units will be split in two blocks, each having three levels, he said.

"It is going to be nice. It is definitely going to have a pool - a common area nicely done with a Caribbean-Spanish flair. It will be affordable but liveable. We won't do anything that we are not proud of," he said.

"We know that this is not our area of expertise, but we are going to be partnering with somebody who has a lot of experience doing that," Williams said, adding that the developer is well known in real estate.

The agreement is due for signing at the end of November, and at that point the developer will assume control of the project, which the financial report said was on a timeline to break ground in January and be finalised in one year.

"Right now, all the building approvals are in and we are ready to roll. We are waiting to sign the joint-venture agreement with the developer and then we can start building," Williams said.

Proven REIT was formed as the vehicle for PIL's real estate investments.

"In February 2012, the first of these investments was completed with a property being purchased through Proven Kingsway Limited, a wholly owned subsidiary of Proven REIT," said PIL's 2012-13 annual report.

The property houses an apartment complex, which has potential for development or resale, PIL said.

"Right now, we are looking at expanding REIT and we are currently in negotiations to acquire two other properties," Williams said Tuesday.

The properties are both in Kingston and they, too, will be used for residential development, Williams told the Financial Gleaner.

The idea for Proven REIT, he said, is to "build a bank of properties to develop over time".

marcella.scarlett@gleanerjm.com