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Financial turnaround at housing agency

Published:Wednesday | April 7, 2010 | 12:00 AM
Joseph Shoucair, managing director of Housing Agency of Jamaica, is seated before a company banner at the Stadium Gardens Phase 2 project ground-breaking ceremony on Wednesday April 1, 2009. - File

Dionne Rose, Business Reporter

Housing Agency of Jamaica Limited (HAJ), the government-owned shelter company, has posted a profit for the first time since it was established 12 years ago.

The estimated net profit of $117 million at the end of March 31, 2010 - referred to as a 'dramatic' outcome in the 2010 Public Bodies report - came not from its land and housing development core opera-tions but was the result of a windfall from the disposal of two parcels of prime Corporate Area real estate, managing director Joseph Shoucair told Wednesday Business.

The accounts are still be to audited.

The precise addresses of the divested real estate - vacant lots at Lady Musgrave Road and Oxford Road in Kingston - were not disclosed, but the HAJ head said the deal netted $100 million.

"We got a good offer and we sold them," Shoucair said.

The results mark a turnaround from $5 million of net losses in 2008/09 - the result of $285 million of impairment charges that eroded $280 million of operating profit.

But the shelter agency's accumulated deficit rose none-theless - from $1.326 billion to an estimated $1.331 billion at March 2010.

Full operational profit

But in the current fiscal year, which kicked off April 1, the deficit is projected to dip to $1.21 billion as profits climb higher to $173 million.

"In the new year we will make a full operational profit that is from building and closing of new schemes," said Shoucair.

HAJ was formed in 1998 from the merger of three state-owned entities - Caribbean Housing Finance Corporation, National Housing Corporation and Operation Pride.

Up to two years ago, the agency was known as National Housing Development Corporation, a name that came to be associated with various scandals and as a persistent loss-maker on housing targeted at low-income earners.

The current year's performance, said Shoucair, will be driven by HAJ's open-market land and housing business and, in particular, new housing that HAJ expects to bring to the market this calendar year.

These schemes include 56 town-houses at Stadium Gardens in Kingston, which the agency said are already sold out; 100 studio units at Portmore Villa in the St Catherine dormitory community; and 65 two-bedroom apartments at the Palms of Portmore, also said to have been sold out; and a 17-apartment development at Lynford Road, off Lady Musgrave Road in Kingston, which is soon to come on the market.

"What is significant, is that for the first time we have made a profit in March 2010 and in March 2011 we will make a profit. That has never happened before," Shoucair said.

The HAJ managing director is pointing to the attainment of cost effectiveness in its operation as the underlying reason behind the turnaround in the company's profits.

"What we have been doing is controlling our expenditure and we have decided to go into schemes that can make some money," Shoucair said.

But not all the HAJ's business lines are profitable. The entity still has a large portfolio of informal settlement to deal with as part of its overall operations.

"The only way to do that is to make some money so we have a surplus left over to do some work in other schemes," according to Shoucair.

Successful internal operations however, will not be sufficient to finance the HAJ total operations, it appears.

The 2010 Jamaica Public Bodies' report, tabled in Parliament March 25, noted that the housing agency would be accessing financing of $811 million from the National Housing Trust and $6.4 billion of loans from the Chinese Government to complete 164 houses and 5,578 service lots.

Shoucair said the Chinese money will help to build and develop 820 houses and lots in St Elizabeth, construct more than 2,000 lots and houses in St Ann, and complete phase two of a project to upgrade a squatter settlement at Belair in St Ann.

The Chinese-funded projects are expected to start by the middle of this year.