No deals yet for Digicel New Kgn properties - Issa blames delayed IMF agreement
Published:Sunday | December 23, 2012 | 12:00 AM
Avia Collinder, Business Writer
Realtor Andrew Issa, the head of Coldwell Banker Jamaica, has reported limited success in his efforts to sell off two properties owned by Digicel in New Kingston, despite, he said, clear interest from investors.
The hold-up, said Issa, is linked to Jamaica's delay in reaching a bail out agreement with the International Monetary Fund.
Without the fund's backing, investors are uncertain about Jamaica's economic prospects. The Jamaican Government had initially been steadfast in its assertion that a deal was possible by yearend but began backing away from that position in early December even while maintaining that there had been substantial progress on the GOJ-IMF talks.
Issa's efforts to strike deals for the properties located in Kingston's high-priced business district appear to have been caught up in that uncertainty.
"The response has been positive so far," he said in reference to investor interest.
"If the IMF deal is signed in the New Year the contracts will be signed soon after that," said Issa, adding his voice to others in the private sector who believe that the failure to announce a deal is affecting market confidence.
Coldwell Banker has been commissioned by Digicel to sell the former Claro building on Knutsford Boulevard, a 10-storey edifice with offices and covered parking facilities totalling 73,000 square feet.
Digicel acquired the building from America Movil, parent of Claro, when the two swapped assets in a tri-country deal that was eventually executed in Jamaica and Honduras but was killed by regulators in El Salvador.
The other property is a five-acre undeveloped lot, accessible from three roads: Windsor, Fairway and Lady Musgrave.
Lot estimate
Gordon Langford, chartered valuation surveyor at Langford and Brown and a past president of the Realtors Association of Jamaica, estimates that the lot may range above J$100 million per acre in price.
"I would say the land will sell for about J$65 million up to J$120 million per acre. Some people want J$150 million per acre for lots in the area but there are no takers," Langford told Sunday Business.
Valuators believe the Digicel lot might be affected by zoning regulations, requiring two-thirds residential and one-third commercial construction.
"This combined with parking requirements
might push the price down to the lower end of the scale," he said
Friday.
As for the Claro building, Langford in a
ballpark estimate, says the property is likely worth US$143 per square
foot (J$13,000-plus per square foot) or about US$10 million and possibly
more.
On Monday, a spokesperson from the Digicel
Group said that the Lady Musgrave property was "bought a number of years
back with the original intention of building our global headquarters on
it. As you know, our plans in that regard have changed and we opted
instead to spearhead the rejuvenation of downtown Kingston by housing
our global headquarters there. As such, the Lady Musgrave property and
the Claro building are surplus to our
requirements."
The new complex is being developed
downtown as the global headquarters of Digicel Group as well as the home
of Digicel Jamaica, its most lucrative
market.
Digicel Group is spending about US$65 million
(J$5.6 billion) on the complex.
Postponed
plans
Digicel told Sunday Business
that staff will move to the new headquarters by early 2013,
representing a postponement of plans to complete relocation by summer
2012. Digicel currently operates from leased space on the RKA Building
in New Kingston.
Issa said he is making progress in
putting together a group of investors for the five-acre
lot.
"For the Claro building we have identified a
possible potential purchaser, but I am required to find a tenant for the
building. We are also working with another group of professional
business who are looking to purchase their own location. There is a
possibility of managing it as strata," he told Sunday
Business.
Issa declined comment on the
interest parties.
"If the IMF deal is signed in the
new year, the contracts will be signed soon after that," said Issa, but
declined to name the interested
parties.