Sygnus Real Estate Finance (SRF) has transitioned into its second investment cycle after the completion of several successful transactions that unlocked value for its shareholders.

At the company’s annual general meeting held last Thursday, March 20, 2025, at the AC Hotel Kingston, members of the SRF executive and management team informed shareholders of plans to undertake even more development projects for properties acquired in the first investment cycle, lasting from 2019 to 2024. Among those projects are a 14-acre Mammee Bay beach property slated for hospitality development and the transformation of a “strategic asset” in Lakes Pen into an industrial property.

 Outlining plans for the second investment cycle, Jason Morris, executive vice-president and chief investment officer at Sygnus Capital Investment – the fund manager for SRF – highlighted some key strategic assets.

“We continue the progress on our 55-acre Lakes Pen industrial asset. One Belmont would have had its first tenant. I suppose it was subsequent to the end of the [first] quarter but the process really started in the first days of November [2024],” he explained.

The One Belmont development is SRF’s flagship project. The over 78,000-square-feet commercial building in New Kingston comprises nine floors. According to Morris, SRF has completed the development, and secured tenancy for the property to generate lease income. At present, the company is making arrangements for part-ownership of the building.

Morris also revealed SRF’s aspirations to expand into other Caribbean jurisdictions.

“We are now seeking to expand our footprint into other Caribbean countries. It was important for us to start with Jamaica, learn Jamaica [and] master Jamaica. Now we are moving out to other Caribbean territories,” he explained.

 “We are evaluating multiple opportunities across four to five Caribbean countries, [for] which when we have more information, we’ll inform you on that,” Morris continued.

The Sygnus Capital VP and CIO said that the company will continue its dry powder operation of investing in properties, generating a gain on the investment, exiting, and reinvesting in new properties.

Another project SRF recently exited as it transitioned to its next investment phase was the Spanish Town-Penwood. The 32,500-square-foot property was completed in 2023, sold to a pension fund and leased to an international tenant in IMCA Jamaica. SRF owns a stake in the property and so will generate rental income in US dollars from it.

“So that’s the first evidence of the great work that David [Cummings — vice-president and head of Real Estate and Project Finance at Sygnus Capital]  and the real estate team have done in terms of from concept all the way to crystallising into money,” Morris stated.

Financial performance

For the financial year 2024, SRF grew its net profit to $315.08 million or by 49 per cent. This increase in profitability was on the back of improved net investment income of $508.50, up 62.7 per cent.

“The main drivers of this, it really has to do with the hard assets that [are] on SRF’s balance sheet, which [are] joint ventures, primarily represented by One Belmont,” Morris said, adding that the company also saw a gain on its investment properties.

The CIO explained that because SRF holds most of its assets in US dollars, gain on assets will be determined by the value of the foreign currency calculated at the end of the financial year. He added that given SRF’s business model of buying property for development and then exiting after completion or buying an asset but reselling it for a gain when a more lucrative opportunity is presented, the quarterly earnings from the company will be lumpy.

To this end, SRF has engaged in third-party real estate development and raising funds for real estate developments called real estate investment notes to generate additional income.

Morris said the company plans to deepen activities in these two business lines in the new investment cycle.

Commenting on shareholder value, he told shareholders when SRF offered an IPO in 2020, its value proposition was to generate a return on equity of 12 per cent. To date, the company has exceeded that target and has returned 19.15 per cent on shareholders’ investment.

Aside from paying dividends last year, SRF’s net book value of $24.95 per share is now outperformed its market value of shares, which recently traded around $11.

At the same time, the company has increased shareholder’s equity over the five year to $8.11 billion, up from $4.79 billion.

“Since you’re equity investors in a company, this means if you’re to dismantle the company, pay off all its debts, sell off all the assets, what’s the residual value that would remain? What would shareholders get in their hand and that is what you refer to in the balance sheet as your shareholders’ equity,” Morris advised.