Durrant Pate/Contributor

Jamaican-based regional real estate development company, First Rock Group is rebalancing its portfolio amid losses for the 12-month period, ended December 31, 2023.

The Ryan Reid-led company recorded a total comprehensive loss attributable to shareholders of US$2.8 million for 2023, representing a decline of US$6.9 million over the prior year. This loss was mainly attributable to losses on the disposal of investment properties and unrealised fair value losses on financial instruments. 

On the positive side, First Rock was able to reduce its expenses to US$3.6 million, representing a decline of US$1.5 million over the prior year. Additionally, the company registered a share of profit from its investments in a joint venture of US$1.6 million. 

Company chairman, Norman Reid states, “These results were attributable to some softening in the property and financial investments markets resulting from the high-interest rate environment, and costs associated with the execution of the company’s portfolio rebalancing strategy. High-interest rates have somewhat curtailed the buoyancy in demand for real estate, which has in turn impacted values.”

Negative trend will be reversed 

However, the company, which has consistently paid dividends up until last year, remains confident that this negative trend will be reversed once interest rates begin to decline. First Rock is committed to continuing its portfolio rebalancing strategy by disposing of variable-income and underperforming residential and commercial properties, and acquiring fixed-income commercial properties with strong tenants, such as the KFC acquisitions in Costa Rica.

According to chairman Reid, who is the father of the current president and First Rock founder, Ryan Reid, ”the rebalancing will see us being more heavily weighted in the Latin American region. The company is confident this rebalancing and de-risking strategy will bear fruit through the execution of development projects for sale and or lease, and acquisition of strong commercial income-producing properties throughout the Latin American and wider Caribbean region, several of which are far advanced in negotiations. These factors along with an expected improvement in the macroeconomic environment should bode well for the company and most importantly, its shareholders, in the short to medium term.”

Financial highlights

First Rock reported a 92 per cent decrease in property income totalling US$543,052 for 2023 compared to US$6.71 million in the corresponding period last year. Property loss for the fourth quarter closed at US$3.46 million compared to property income of US$455,933 for the comparable quarter of 2022.

Of the year-end property income, rental income amounted to US$206,341 (2022: US$641,632), representing a 68 per cent decrease year-over-year. Realised and unrealised gains on investment properties fell by 62 per cent to US$2.38 million compared to US$6.21 million for the year ended December 31, 2022. Loss on disposal of investment property amounted to US$2.04 million (2022: US$140,084).

Investment loss for the year amounted to US$1.23 million (2022: investment income of US$3.22 million), while interest expense increased by 32 per cent from US$589,432 in 2022 to US$779,643 in the period under review. As a result, net investment loss for the year ended December 31, 2023, amounted to US$2.01 million relative to net investment income of US$2.63 million in 2022.