Sat | Dec 3, 2022
COVER STORY

Stanley Motta to invest in new commercial space at 58HWT complex

Published:Friday | October 7, 2022 | 12:07 AM
A section of the 58HWT complex in Kingston owned by Stanley Motta Limited.
A section of the 58HWT complex in Kingston owned by Stanley Motta Limited.

Property developer Stanley Motta Limited plans to spend US$12 million, or $1.8 billion, to construct another building on the grounds of its 58HWT complex in Kingston, starting in January.

The new building will rise 10 storeys and will be marketed to outsourcing firms and seekers of office space for rent, said Financial Controller Clifton Morgan at Stanley Motta’s annual general meeting on Wednesday.

It’s expected to be completed in 18 months and commissioned by 2025.

Stanley Motta operates ‘a campus’ containing five buildings that currently span 200,000 square feet.

The company will demolish one of the current structures on the property known as Unit 1, and replace it with the 10-story edifice. The project will span 126,000 square, of which 84,000 square feet will be rentable space. It will also add 44 parking spaces.

The development paves the way for more diversified tenants outside the outsourcing market.

Stanley Motta, a listed company controlled by the Musson Group, made profit of $800 million last year – and $848 million a year prior – on capital of $5.4 billion, resulting in about 15 per cent return on capital. Half of the profit, however, is non-cash, stemming from property revaluations.

Absent the revaluations, the returns would have been around six per cent, based on Financial Gleaner estimates.

“The returns are good for real estate,” said Director Patricia Sutherland, in response to Financial Gleaner queries at the meeting that was chaired by Director Sandra Glasgow in the absence of Chairman & CEO Melanie Subratie.

In 2017, prior to Stanley Motta being taken public by Musson, the company’s annual revenues amounted to $72 million. But as Stanley Motta added leasable space at 58HWT over time, its top line expanded, hitting $492 million last year.

For this year, the company has made half-year profit of $110.4 million off $250 million in revenue.

Stanley Motta has said that rising inflation doesn’t hurt the business. That’s because the company can realign its lease charges to its tenants to the benefit of shareholders.

But on the negative side, rising interest rates, which are being pushed up by the central bank to control inflation, are expected to impact its cost of capital if it approaches the market for new debt.

“This can push up borrowing costs when new capital is to be sourced for future projects,” the company said in its annual report.

“The company will endeavour to take all necessary steps to mitigate, as much as possible, against any possible negative impact,” it said.

Stanley Motta holds $6.2 billion in investment properties, up from $5.48 billion at December 2020. The assets were revalued, which added half-billion dollars in 2021.

The company financed that buildout with debt and equity.

During the year, the company also refinanced its loan of US$4.5 million into Jamaican dollars, which will allow it to save millions each year as the local currency depreciates.

“Each year, due to the revaluation of a US-denominated loan, we have translation losses of approximately $45 million,” Stanley Motta stated in its financials.

The company, which was started in 1948 by businessman Stanley Motta, originally sold and rented appliances. In 1983, it was acquired by Musson and continued to operate until 1998, following which it became a dormant subsidiary.

In 2015, Musson selected Stanley Motta as the vehicle through which it would develop its 58HWT project. Then in 2016 and 2017, Stanley Motta acquired other properties at the 58 Half-Way Tree Road location from Musson.

Currently, Stanley Motta owns all the properties at the complex, either directly or through its own wholly owned subsidiary, Unity Capital, with the exception of the historic great house, which was retained by Musson.

steven.jackson@gleanerjm.com