Sat | Dec 5, 2020

KPREIT lands long-sought Ashenheim Road asset

Published:Wednesday | October 21, 2020 | 12:10 AMKarena Bennett/Business Reporter
Kevin Richards, CEO of Kingston Properties Limited.

Real estate investment trust Kingston Properties Limited, KPREIT, plans to spend no more than $60 million on improvements to its newest acquisition, commercial property at East Ashenheim Road in Kingston, before going to the market in search of tenants.

The deal announced last week for the 88,000-square foot warehouse located in the city’s industrial belt, came after nearly three years of negotiations, in-between the property at one time going under contract for sale to another buyer, and delays linked to the COVID-19 outbreak.

It’s one of the longest-running deals chased by Kingston Properties, which – although possessing a warehouse and office complex on Spanish Town Road that sits just metres away from the new property – was looking to get lands closer to the busy Kingston ports.

East Ashenheim Road is 3.5 kilometres, or just six minutes, away from the ports. The company plans to spend around $60 million on renovations, which CEO Kevin Richards said would immediately serve to drive up its value.

“We have a property on Spanish Town Road but we wanted to get a property in that vicinity because access to the ports is very important to prospective tenants,” said Richards.

“This is a value-added opportunity so we will be spending some funds to upgrade the property and it will be multi-tenanted,” he told the Financial Gleaner.

The warehouse sits on less than four acres of land and was purchased for what the company described as a ‘significant discount to replacement cost’ at $607.5 million.

The renovations have begun on the building, which is still currently occupied by the unnamed seller, and expected to last two months.

New tenants, which are said to operate in the manufacturing and distribution sectors, are expected to move in by the end of November.

With this acquisition, Kingston Properties has just over 300,000 square feet of commercial and residential property under management. Its target is to grow its portfolio to one million square feet by 2022.

“We have quite a bit of acquisitions to do over the next three years,” said Richards. “It is possible that we could close on more acquisition before the year ends, but we have to be very cautious in this environment. There are lots of deals that come to us, but we have to be careful about the acquisitions,” he said.

Kingston Properties made its single largest purchase of real estate in July – the Harbour Centre building in Cayman Islands – a 30,000-square foot property acquired for US$10.7 million.

Over its 12 years of operation, the company has invested in a mix of commercial and residential properties, including office buildings, warehouses and condominiums, in the United States, Jamaica and Cayman Islands.

With the Ashenheim Road purchase, its concentration of assets in Jamaica is now 47 per cent of the overall portfolio, and 41 per cent for Cayman Islands.

The Florida market, where Kingston Properties is looking to transition from low-return condominiums into properties that generate a higher return on investment, is now down to 12 per cent of the portfolio from 20.5 per cent earlier this year.

Halfway through the financial year 2020, Kingston Properties posted losses of US$343,397 on increasing revenues of US$903,470, largely as a result of foreign exchange losses.

Its assets have climbed 77.4 per cent to US$39.4 million as of June 2020, primarily driven by cash holdings from a renounceable rights issue that was executed in the final quarter of 2019.