UDC to invest in new office building, Caymanas Estate
Avia Collinder, Business Reporter
Desmond Malcolm, general manager of Urban Development Corporation (UDC), said on Tuesday that the majority of proceeds from the sale of five properties will be spent on the development of the Festival Village in Kingston and critical infrastructure for Caymanas Estate.
At the same time, the agency announced plans for a new office centre building that may cost up to $1.4 billion.
Speaking on the margins of a press conference called by the UDC board on the agency's achievements, Malcolm said Caymanas would be hooked up to the Soapberry sewerage system so that large developments slated for the massive 10,700-acre estate can proceed.
The current UDC board's tenure comes to an end on Friday, February 13.
About $1.3 billion has been collected by the UDC in the last two years from five properties divested. The sewage pipeline is estimated to cost $700 million and will take eight months to complete, starting April.
The Festival Village to be developed on the Kingston waterfront, has been costed at $100 million and is to be completed in six months.
"We have a very big project, the Caymanas development pipeline, which is nearly $700 million. It's to facilitate more development in Caymanas," Malcolm told Wednesday Business.
"Without us having a central sewage system we are not able to have more people building in Caymanas. So by putting in this pipeline we will be able to discharge all the sewage to the Soapberry plant," he said.
The development of the estate has been in the works since 2009. To date, a mid-income residential development by New Era called Caymanas Country Club has gone through three phases, but the special economic zone, which is a project of Factories Corporation of Jamaica, and other aspects of the mega-project are yet to get underway.
At the UDC press conference on Tuesday, board chairman K.D. Knight said the agency had closed sales on five properties: Mahogany hotel, which was to a private developer for $240 million; the Forum Hotel, which was sold to Portmore Marine Development Limited for J$350 million; Oceana Hotel which was divested to a Jamaican-Canadian consortium for J$385 million; the Machado Complex, which was sold to Heart Trust/NTA for $104 million; the Jamintel building which was divested to the Ministry of Transport and Works for $150 million; and a land lot in downtown Kingston, sold to GraceKennedy Limited for $75 million.
Knight said that the divestment of the five properties had resulted in significant savings and avoided costs, among them a
$600,000 monthly bill for insurance, security and other costs related to the Jamintel building.
The sale of Jamintel, Mahogany Hotel and the Machado Complex were being disclosed for the first time on Tuesday. Heart Trust disclosed on its website that it partnered with the Overseas Examination Commission to acquire Machado.
The UDC has also leased the Victoria Pier to Yosamini Holdings Limited for 25 years - the new investor will be redeveloping the pier to incorporate an upscale restaurant and lounge, sports gaming facility, art gallery and outdoor entertainment; while Ideal Warehouse has been leased to CD Alexander Realty, which is owned by the LP Azar Group.
Knight said that in line with policy, 75 per cent of monies collected from divested properties will be spent on capital projects.
He said the festival village would bring back night life to Kingston and that a housing project being pursued in collaboration with the National Housing Trust was also intended to revitalise the housing stock in the downtown belt of the capital.
The UDC chairman also announced plans to develop a new office centre behind its headquarters at 12 Ocean Boulevard to fill increasing demand for office space, while noting that downtown Kingston was being redesigned in the model of Washington DC in the United States.
The investment in the new commercial space is projected at $1.3 to $1.4 billion, according to Knight.
Malcolm also told Wednesday Business that office space occupancy downtown was high at 80 per cent.
In other updates, Knight outlined that 15 of 18 recommendations made in an operational audit by the auditor general has been completed, with those outstanding being annual reports, statutory deductions, and valuations for all properties owned by the UDC.
The annual reports, he outlined, were delayed by a decision relating to the treatment of the Montego Bay Conference Centre, whose assets and debt were held by separate bodies. UDC has since decided to assume 20 per cent of the liabilities, Knight later told Wednesday Business.
The delay was also linked to the late payment of statutory deductions, which in turn had been affected by high rental receivables.
UDC has made very little progress on the collection of rentals from tardy government agencies, but reported headway on collections from private sector tenants.
Knight added that the agency was in the process of valuing its holdings. Otherwise, the Jamaica Public Bodies report estimates the value of the agency's total assets at about $45 billion, a figure subject to audit verification.
UPDATE: This story has been corrected to reflect the right cost of maintaining the Jamintel building.