Real estate finance company, Sygnus Real Estate Finance, SRF, which posted a loss of $100 million for the quarter ended November 30, 2021, is now leading the construction of an industrial and logistics park in the Lakes Pen area of St Andrew which was once run directly by businessman Gassan Azan. SRF has completed the acquisition of 55 acres of the more than 400-acre Azan property, part of the sprawling Bernard Lodge deeded lands on which the serial entrepreneur is developing an $11 billion high-tech farming business in two phases since around 2019.
Last year, SRF spent $6 million, or more than $940 million, to also acquire 100% of the shares of Azan’s Lakes Pen Holdings Limited, the special purpose entity used to oversee and drive industrial development.
The real estate finance company, which is part of the Sygnus financial group in which Azan is the main investor and key shareholder, reports that the company has recorded a gain of $ 1.31 billion on the transaction involving the former sugar cane lands. which run along sections of the east-west leg of Highway 2000. The property sits on the southeast corner of Azan’s state-of-the-art agribusiness on Bernard Lodge land which he says is intended to supply its MegaMart superstores and its chain. of supermarkets in the Dutch Caribbean.
“The gain you see is that the land use changed to industrial when the land was purchased, so the value changed,” Sygnus Group co-founder and chief investment officer explained. Jason Morris, the real estate gain in comments to the financial gleaner.
“We can do warehouse, light manufacturing, logistics. We have already completed the master plan and feasibility study, so we know the best way to unlock the enormous value we believe exists in the asset,” Morris said of the industrial plans for the area which now joins the property finance holding’s growing real estate portfolio.
He says SRF has retained the services of an international logistics consultancy firm based in Washington DC in the United States to advise on the way forward. Morris is not appointing consultants at this time citing competitive reasons. It also does not disclose the results of the studies so far, but indicates that the matter will now be submitted to SRF’s Investment and Risk Management Committee for approval in order to proceed to the next stage of planning.
The real estate company posted total comprehensive income of $1.81 billion at the end of its fiscal year in August 2021, largely due to the $1.31 billion gain on the Lakes Pen deal.
On the negative net income of $99.95 million in the three months to November, Morris said there will still be a characteristic “fatness” to SRF’s business, with investment cycles and good cash flows revenue from projects. The company posted a net profit of $25.2 million for the previous corresponding quarter.
Morris says SRF is set to close at least four real estate development projects with sales revenue from those transactions. At the same time, he downplays talk of difficulties in executing other projects, pointing out that the company’s strategy allows proceeds from completed projects to be used to fund others.
“We have four assets that we will be leaving shortly, so little dry powder to pull the trigger on is not a problem. Also, there are lines of credit,” Morris said.
Its Ocean’s Edge development in Discovery Bay, St Ann, with 16 beachfront units, is more than 80% complete with all units sold or on offer, the company reports. The target completion date is March/April 2022. Its eight luxury apartments at Norbrook in St Andrew would also be 80% complete with all units sold or under offer and with a similar completion schedule. In Montego Bay, St James, the Surreal at the Sugar-Mill project with 26 units is expected to be completed in March/April. In Kingston, SRF’s Spanish Penwood project at Spanish Town Road, an industrial warehouse and office project which began in June 2021, is due for completion in July this year.
“Our strategy is not to hold onto assets. We go in, look at how we can unlock value, sell in and out and move on to the next project, in a nutshell, wash, rinse and repeat,” Morris said.
SRF also recently opened One Belmont, a nine-story office complex near the outskirts of New Kingston, slated for completion in early 2023.