Sygnus Real Estate Finance Limited (SRF) a speciality real estate investment company that utilises flexible capital (debt and equity) to unlock value in real estate assets across the industrial, residential, commercial, hospitality and infrastructure segments, has announced its financial results for the financial year ended August 31, 2024 (“FYE Aug 2024”). 

SRF achieved a 49.0% increase in net profits, reporting J$315.08 million, up from J$211.44 million in the previous year. SRF’s book value per share increased to J$24.85, compared with J$23.89 in the prior year. Over its first investment life cycle, SRF has delivered an average return on equity of 19.1%.

SRF also completed its largest capital raise to date, securing the equivalent of J$4.11 billion by way of private placement. Of this amount, J$3.38 billion was raised during the financial year ended August 31, 2024. The capital raise proceeds are earmarked for new real estate investment assets and refinancing existing debt. 

In a historic move for the company, during a meeting held on November 6, 2024, the board of directors declared SRF’s first dividend payment to shareholders. The dividend will be J$0.2012 per ordinary share, with a record date of December 13, 2024, and a payment date of December 30, 2024.

SRF continued to make significant progress on its major real estate assets, including advancing the Belmont Road 9-storey commercial tower to 99% completion. SRF also executed long-term lease agreements and advanced interior buildout works for some tenants. Other key milestones include optimising returns on properties at 56 and 58 Lady Musgrave Road through a strategic third-party sale, as well as completing the investment exit for the Spanish Town Road Industrial facility. In the latter case, SRF retained a one-third share in the asset, creating a new income-generating class of assets. Following the end of the financial year, SRF successfully exited the 3.2-acre investment property in Kingston’s ‘Golden Triangle’ which previously housed the former French embassy, selling it for more than the original purchase price. This exit is part of the group’s ongoing strategy to optimise its asset portfolio while maintaining a focus on enhancing shareholder value.

Looking ahead, SRF’s second investment cycle will focus on key strategic assets such as Mammee Bay in St Ann and Lakes Pen in St Catherine.  As the company transitions between its first and second investment cycles, it anticipates a substantial increase in capital redeployment as it completes exits and prepares for new investments. 

In light of this transition, the company’s management fees have been temporarily reduced effective September 1, 2023 from 2.00% of Core Assets under Management (CAUM). Management fees were reduced to 1.00% of CAUM for the period September 1, 2023 to August 31, 2024 and will be reduced to 1.25% of CAUM for the period September 1, 2024 to August 31, 2025. Management fees will return to 2.00% CAUM effective September 1, 2025.

For the financial year ended August 31, 2024, SRF reported total investment income or core revenues of J$839.24 million compared to J$765.56 million in the prior year. This growth was primarily driven by increased gains on investment properties and a higher share of profits from joint ventures, particularly as the One Belmont project nears the realisation of its full income-generating potential. 

As of FYE Aug 2024, SRF’s investment portfolio was allocated across nine real estate sub-categories, with the largest allocation to hospitality (39.4%), industrial (20.7%) and commercial (13.4%).  SRF’s capital was allocated across four investment categories, namely property investments at 70.6%, investment in joint ventures at 13.8%, Real Estate Investment Notes (REINs) at 12.7% and Lease Participation Investments (LPIs) at 2.9%. 

“We are pleased with SRF’s strong performance as we near the end of our first investment cycle. Reaching this milestone not only highlights the success of our strategy, but also allows us to reward our shareholders with their first dividend payment. As we transition into our second investment cycle, we look forward to further unlocking value in our real estate assets,” shared Jason Morris, executive vice president and chief investment officer, Sygnus Group.