BANK of Jamaica (BOJ) has acquired the former French embassy at 13 Hillcrest Avenue in St Andrew for US$7.965 million ($1.25 billion) from Sygnus Real Estate Finance Limited (SRF), which continues to optimize its real estate portfolio took it.

According to National Land Agency records, the transaction was registered on September 18, while SRF’s audited financial statements recorded that the sale was completed on October 3. Charlemagne Holdings Limited, a wholly owned subsidiary of SRF, acquired the property from the Province of France in November 2021. He purchased it for US$6.50 million ($1.01 billion) and then leased it to the Attorney General’s Chambers, which remains its current tenant. It is unknown what Jamaica’s central bank will do with the 3.2-acre mixed-use commercial/residential property.

This follows SRF’s sale this year of 1.2 acres of land at 56-58 Lady Musgrave Road, also in St Andrew, to Ripton International Capital Holdings Limited for US$4.5 million ($697.99 million). It is his second notable sale. SRF has also listed the 0.5-acre property at 26 Seaview Avenue, St Andrew, for sale, with a current book value of $291 million.

These sales come at a time when SRF is beginning to close its initial investment life cycle, having completed two major development projects (Spanish Penwood and One Belmont). Spanish Penwood, a 2.85-acre property at 443-445 Spanish Town Road, St Andrew, was sold for $650.54 million in fiscal year (FY) 2024, resulting in a loss on disposal of $77.28 million. However, SRF subsequently signed a lease participation agreement (LPA) entitling it to benefit from one-third of the rental income from the property. SRF spent $385.70 million to acquire this beneficial interest through the LPA.

Regarding One Belmont in New Kingston, St Andrew, SRF has substantially completed the nine-storey corporate office building at 1-3 Belmont Road, Kingston 5, and is currently completing aesthetic works such as landscaping works. Five floors at this property are effectively leased, with the first tenant set to occupy the space next month.

However, since this relates to the conversion of the asset into cash, it has not yet been publicly disclosed to shareholders. In last Friday’s earnings call, Jason Morris, co-founder and chief investment officer of Sygnus Capital Limited, stated that SRF will maintain its economic interest in the property while monetizing the underlying value associated with it. SRF owns a 70 percent stake in joint venture company Audere Holdings Limited, which owns One Belmont, which is currently valued at $5.80 billion.

These investments were completed within the scope of SRF’s first investment life cycle, which can be defined as the first project period in which the company reveals value in real estate through different means. The company’s second investment lifecycle will focus on a 14.4-acre property in Mamme Bay, St Ann, and a 55-acre property in Lakespen, St Catherine. These assets will focus on hospitality and industrial segment themes.

“We’ve also received additional studies that we’ve mentioned, so we continue to make very good progress towards decision on this particular property. Once we reach this milestone, of course, we’ll be able to update you on how we’re going to unlock the value of this stunning waterfront property,” said David, head of real estate and project finance at Sygnus Capital Cummings.

SRF has received preliminary approvals from the National Environmental and Planning Agency (NEPA) to develop a 250-room, 9-bungalow, 21-villa hotel. This property is worth $5.79 billion.

The Lakespen property is located in the St Catherine industrial belt and the earnings release states construction is targeted for mid-2025. However, Cummings noted that the approval process between NEPA and St Catherine Regional Council could take four to seven months, separate from the design phase of the proposed industrial real estate asset.

SRF is also set to explore opportunities for the 0.9-acre property on Montrose Road, in which it holds a 51 per cent stake in joint venture company Monadh Rois Holdings Limited.

SRF’s interest income from its real estate investment notes (REINs) decreased 29 percent to $180.07 million in fiscal 2024, which ended Aug. 31, due to the completion and sale of certain real estate projects financed by these REINs. After accounting for higher interest expense, net interest expense increased by 208 percent to $202.78 million.

Although SRF achieved higher fair value gains on its real estate assets and benefited from reduced operating expenses, it still recorded a consolidated operating loss of $130.88 million. After accounting for its share of profits from its two joint ventures, SRF’s pre-tax profits rose 140 percent to $362.61 million, and its net profit rose 49 percent to $315.08 million.

Total assets increased five percent to $15.85 billion; The value of its investment properties increased to $9.26 billion and its cash value increased to $900.97 million. Total liabilities rose five percent to $7.74 billion, with the company raising $25.90 million ($4.11 billion) between August and October, including $15 million in private placement and $1.76 billion. Shareholder equity reached four percent to $8.12 billion and book value was $24.85.

SRF’s stock price closed at $11.50/$0.0495 on Tuesday; This has caused the Jamaican dollar bond to rise 12 percent in 2024, while the US dollar bond has fallen 29 percent to date. SRF will consider its first dividend after the recent sale of different assets at the board meeting today. SRF is also working with the JSE on the issue of payment-in-kind shares to Sygnus Capital and subscription guarantees to general shareholders.

Although SRF has currently only invested in Jamaica, future prospects in the Caribbean are not too far off for the real estate company. It will seek to deepen access to flexible capital and add value to the Jamaican real estate market through joint ventures, joint developments and REINs. Regarding the two non-performing REINs, Morris noted that the Ocean’s Edge development project has received good bids so far. Ocean’s Edge Country Club was a real estate development in Ocean’s Edge that did not come to fruition and went into receivership with 16 unfinished townhouses managed by Business Recovery Services Limited, the receiver/manager.

“As a specialized alternative investment company dedicated solely to the real estate asset class, SRF aims to play a leading role in expanding access to flexible capital to unlock value in real estate assets in the Caribbean. SRF has made progress toward this goal by partnering with owners of strategic real estate assets through joint ventures. Over the next fiscal year, SRF will increase collaboration with strategic asset owners under joint ventures or joint investments to unlock value in real estate assets,” stated SRF’s report on potential opportunities in FY 2025.