As revenues continues to dwindle exacerbated by COVID-19 induced losses, University residential developer, 138 Student Living Jamaica is seeking a 12-month reprieve on principal bond payments amounting to several millions of dollars.

This is among the strategies being pushed forward by the company, which is also in discussions with its bankers and financers to negotiate the delay of payments, as a means to mitigate the effects of the pandemic, which has been seriously hurting the company. 138 Student Living Jamaica has confirmed that discussions are now taking place with its bondholders about the 12-month reprieve on principal payments.

However, company chairman, Ian Persaud is not giving out any details about those discussions or the extent of the financial aid being sought by 138 Student Living Jamaica from its bankers and financiers.  However, he has detailed in the company’s just-released 2020 annual report some of the strategies being rolled to curtail the losses being incurred as a result of COVID-19.

Cauterising the losses being experienced

Those strategies also seeks to cauterize losses incurred from the fact that students on the University of the West Indies campus, where its student residential housing are located, have given up residency owing to the fact that classes have migrated online.

In dealing with these challenges 138 Student Living Jamaica has decided to reduce its capital expenditure plans, minimize maintenance activities, engage the government to earn revenue from housing individuals on quarantine, and consolidating accommodation to one block on each hall of residence to reduce utilities and staff cost.

For the 2020 financial year, the university residential developer reported an audited net profit attributable to shareholders of $316.78 million, which represents a 12.8% or $293.81 million year-over-year increase. The main driver of this improved performance is the widened gap between revenue and expenses, where revenue increased by 25.6% or $270.34 million year-over-year and administration and other expenses declined by 4.6% or $36.46 million.

Additionally, there was a significant decline in taxation of 84.9% or $36.17 million. Supporting the outturn of these variables is the variation claims relating to Irvine Hall, one of the halls the company operates at UWI Mona campus, whereby when certain revenue levels are not met, 138SL is entitled to claim the difference from the university

Fourth quarter loss of $54 million

Additionally, the effective management of operating costs has also contributed to this outturn. Notwithstanding, the entity endured a loss of $54 million in the fourth quarter of the financial year, as a result of the significant reduction in occupancy level from 99% pre-COVID to levels below 20%.

Furthermore, for the first semester effective September 7, 2020, the University has moved classes online which has caused a number of students to defer their accommodation requirement to the next semester.