Business
JAM | Aug 10, 2022

Sagicor X Fund continues strong pace of recovery

/ Our Today

administrator
Reading Time: 3 minutes

Real estate fund now registering pre-pandemic performance

Sagicor Group Jamaica’s headquarters along Dominica Drive in New Kingston.

Durrant Pate/Contributor

Amid a global economic challenges and adverse market conditions, Sagicor Real Estate X Fund continues on a strong pace of recovery to pre-pandemic performance during its second quarter, ended June 30, 2022.

This is good news for stockholders as the group recorded net profits attributable to stockholders of J$110.16 million, a marked improvement over the prior year’s net loss of J$47.39 million. The group’s core operations, hotel activities, continue to be the main driver of the improved results.

The performance underlines an increase in earnings per share to J$0.05 (June 2021: (J$0.02)) and X Fund’s share price ended the quarter at J$8.22. Earnings were driven by a 27 per cent year-over-year growth in total revenues to J$3.42 billion.

The increase in occupancy levels and hotel bookings resulted in a J$1.68 billion or 90 per cent improvement in hotel revenues over the prior year. This outpaced the increase of J$1.09 billion or 76 per cent in hotel expenses, resulting in an improvement in hotel margins from 23 per cent to 29 per cent.

An increase in the interest-earning assets and a decrease in finance costs contributed favourably to the group’s performance. However, market volatilities caused by rising interest rates and high inflation generated capital losses of $275.15 million (2021: $803.47 million Gain).

Hotel and commercial operations

DoubleTree Orlando recorded profits of J$290.42 million, a J$408.43 million improvement over the prior year’s loss. This was driven by growth in hotel revenues and improvements in hotel margins, against the backdrop of an 11 per cent increase in occupancy levels since December 2021 and 13 per cent since June 2021 to close at 94 per cent.

The increase in booking demand and the growth in corporate and group events also gave rise to higher average daily rates. Hotel expenses continued to be efficiently monitored in line with the growth in revenues. During the quarter, the group continued its efforts to optimize operations and improve financial performance, through the wind up of Jamziv Mobay Jamaica Portfolio Limited (Jamziv), which previously held the Playa shares.

The Playa shares were sold in 2021. Currently, the segment includes Xfund’s holdings in the Sigma Real Estate Portfolio. The Sigma units recorded a negligible loss for the period.

Other operations segment recorded losses

The segment recognised losses of J$177.74 million (June 2021: J$646.13 million profit), reflective of the adverse market conditions impacting the investment portfolio. This led to significant foreign exchange and capital losses recorded during the period.

Nevertheless, the segment experienced significant improvements in net investment income of J$117.55 million due to growth in its interest-bearing securities. Additionally, the retirement of debt facilities resulted in savings of J$154.96 million on finance costs.

Christopher Zacca, outgoing chairman of Sagicor Real Estate X Fund.

On the matter of liquidity and solvency, the group generated positive cash flows of J$1.33 billion from its operating activities (June 2021: J$328.49 million). Cash and cash equivalents excluding restricted cash were reduced to J$4.87 billion (June 2021: J$6.88 billion), as the funds were reinvested into higher-yielding assets.’

In his outlook, Sagicor X Fund’s outgoing chairman, Christopher Zacca, admitted that the first half of 2022 “brought forth unpredictability and new economic challenges. Inflation in the US economy continues to increase, with another record-breaking inflation rate of 9.1 per cent year-over-year recorded in June 2022, up from of 8.5 per cent in March 2022, the largest year-over-year increase in 40 years”.

He added that the group “remains cautiously optimistic about the future and continues to manage the business accordingly”.

Comments

What To Read Next