Rental income up 58% for March quarter, Group net profit after taxes up 390% to US$623,338

The acquisition of a number of real estate properties in Jamaica and the region during the latter half of 2020 is now paying off for Kingston Properties Ltd, which is reporting a 58 per cent increase in rental income for the March 2021 quarter.

In addition, the real estate listed company experienced a 390 per cent jump in net profit after taxes to US$623,338. Rental income increased 57.7 per cent to end the quarter at US$709,695. The higher year-on-year revenue was mainly due to the acquisition of new properties during the second half of 2020.

This is in addition to Kingston Properties achieving full occupancy at its Grenada Crescent property in Jamaica and increases in rent at some of its other properties. Operating expenses, which include direct property and administrative expenses, increased by 7.2 per cent to US$272,035, up from $253,269 in 2020.

The increase is mainly as a function of higher year over year direct property expenses such as insurance costs and repairs and maintenance, as well as administrative costs such as professional fees and staff costs. However, the reduction in the real estate outfit’s condo portfolio during 2020, resulted in a 50 per cent reduction of both property taxes and homeowners association fees.

Profits getting bigger

Profit before net finance charges increased to US$672,272 in the first quarter of 2021 compared with US$216,163 in the same prior year quarter. This primarily resulted from increased rental revenues, an increase in the fair value of investment in a US-based real estate fund as well as higher fee and property management income.

Profit before income tax for the quarter amounted to US$625,735 compared to a loss of US$185,093 in the same prior year quarter due to higher net finance costs in 2020 compared to the current year. In 2020, net finance costs included foreign exchange losses, both realised and unrealised, totalling US$379,026 arising from the translation of local currency balances held at the end of the reporting period.

These prior period losses resulted from holding higher than normal local currency cash balances raised from our rights issue in the fourth quarter of 2019. Actual interest expenses year on year decreased by 21.0 per cent despite higher loan balances in 2021.

This was mainly due to the reduction of the Group’s borrowing costs on its debt in both Jamaica and The Cayman Islands. Net profit after tax in the first quarter of 2021 amounted to US$623,338 compared to a loss of US$214,877 in 2020.

Investment in properties portfolio climbing

Investment in Kingston Properties property portfolio increased by 66.0 per cent year on year to US$39.7 million with the acquisition of both an industrial property in Jamaica and a multi-storey office building in The Cayman Islands in the second half of 2020 and one in the first quarter of 2021 along with a higher fair value improvement on a property in Jamaica.

During the review quarter, the company acquired an office building in the New Kingston on a sale and leaseback agreement for a consideration of approximately US$1.2 million. The property is slated for development in the future.

Total assets stood at US$44.4 million as at March 31, 2021 compared to US$39.5 million the previous year, an increase of 12.1 per cent. This was primarily comprised of investment properties as well as cash and cash equivalents of $2.3 million.

Total loans payable of approximately US$13.5 million at March 31, 2021 represented a 50.2 per cent year-over-year increase, which primarily resulted from financing the purchase of the Harbour Centre building in the Cayman Islands and extinguishing the Terrabank loan in the US. Kingston Properties continue to maintain fairly conservative debt ratios, as part of our risk management strategy.

However, while interest rates remain low, the real estate development and investment company said it would continue to judiciously pursue the leveraged expansion of its property portfolio.