Profit slumps but management optimistic about acquisition drive

·      Durrant Pate/Contributor

First Rock is badly hurting from foreign exchange (FX) losses, particularly over the last two quarters, which has taken a toll on the Jamaican listed/St. Lucian registered real estate development company.

For the September quarter, the company’s profitability slumped going in the red, delivering a net loss attributable to ordinary shareholders of US$674,536, which yielded an Earnings Per Share (EPS) of negative US$0.002. Net loss attributable to ordinary shareholders for the nine-month period totalled US$1,45,640 and an EPS of negative US$0.005. 

The results were driven primarily by unrealized FX losses on translation of foreign currency-denominated liabilities, which amounted to US$72,034 for the September quarter and US$275,170 for the combined three quarters.

This was compounded by higher interest expense, which jumped to US$118,839 for the September quarter and US$524,340 for the nine months ended September 30, 2024.

Ongoing high-interest rate environment 

The Group’s financial performance continues to reflect the impact of the ongoing high-interest rate environment in Jamaica, which exerts downward pressure on property values. This has resulted in lower Property Income relative to prior year. 

Property Income for the September quarter dwindled to US$49,056 and US$1,916,074 for the combined three quarters. To mitigate the impact on the bottom line from reduced revenues, the Group managed to reduce its overall administrative and general expenses by 20% to US$2,274,250 for the nine month period compared to the same period in the prior year. 

This cost management effort is part of the ongoing strategy to mitigate the impact of reduced revenues on the bottom line. As the Group looks to continue increasing its leverage in line with international benchmarks for Real Estate Investment Trusts, the present high interest rate environment requires prudence and patience in the execution of this strategy, to ensure interest costs are effectively managed. 

Brighter future ahead for First Rock

Group Chairman, Norman Reid is painting an optimistic outlook telling shareholders, “….ongoing commitment to strategic growth remains steadfast as we navigate the headwinds that obtain in today’s real estate environment. By continuing to execute on our portfolio rebalancing strategy, which focuses on acquiring high-yield, income-generating properties across Latin America and the wider Caribbean region, we have built a resilient foundation that supports sustainable growth.“

He points to the acquisition momentum the group has been embarking with its purchase of a fully tenanted investment property in Grand Cayman alongside its two KFC locations in Costa Rica, which continue to deliver stable rental income under long-term lease agreements. 

Plans are underway for additional site developments, as the management team at First Rock remains optimistic about finalizing additional acquisitions across the region with several promising opportunities in advanced stages of negotiation.