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Jamaican REIT to buy warehouse

Published:Wednesday | March 3, 2010 | 12:00 AM
Fayval Williams, director of Carlton Savannah REIT, says the company wants to diversify into apartments and other types of real estate investment. - File

Kingston Properties Limited (KPREIT), Jamaica's only real estate invest ment trust, said it has entered into a binding agreement to purchase commercial property on Hagley Park Road in Kingston.

"It is a warehouse/office building currently being used and fully occupied by DiverseyLever Jamaica Limited," said Fayval Williams, executive director of KPREIT.

The purchase would replace the one asset that the company had but gave up several months ago - seven apartment units in a newly constructed hotel in Trinidad, the Carlton Savannah.

Williams would not confirm the purchase price, but disclosures in the company's December earnings report suggest that it was about a J$178 million transaction.

KPREIT said in the report that it had put a deposit of US$300,000 (J$26.4 million) on a piece of real estate, and that the deal committed the company to further expenditure of US$1.7 million (J$151.395 million).

Williams said the purchase would likely be executed mid-month.

On the hunt

The listed real estate trust company has been on the hunt for viable opportunities since September last year when it sold its only asset on the request of Balton Properties, developer for the Carlton Savannah Hotel.

Since then, KPREIT has reported the sum of just over $336 million on its balance sheet as proceeds received from the rescinding of the purchase agreement with Balton Properties Limited for its seven units in the Carlton Savannah Hotel and Health Club and Spa in 2008.

Now, almost two years in operation, KPREIT is yet to report any revenues, but it made a profit of $21.7 million last year.

The stock, now priced at $4 per share, reflects very little trading activity on the Jamaica Stock Exchange.

Five-year lease

KPREIT says the new purchase of the 26,000-square-foot building "facilitates its entrance into the warehousing/logistics property market."

The owner of the building was not ascertained. Its occupant, DiverseyLever Jamaica Limited, currently has a five-year lease with an option for another five years.

"KPREIT looks forward to a long and mutually beneficial relationship," the company said in a release.

DiverseyLever Jamaica is a subsidiary of JohnsonDiversey Incorporated, an American company which deals in commercial cleaning agents and hygiene solutions.

The company has been in Jamaica for over 40 years and has two outlets, one in Kingston and the other in Clarendon, along with its base on Bell Road East.

Williams noted that KPREIT is also working to tie down at least one other deal before the end of this quarter.

"We are engaged with several others ? one sure ? and others in the pipeline," she said, "but we have to do our due diligence to get the best yield possible on the properties."