Sep 2013 Financial News

Sagicor plans on Caribbean expansion of Jewel resorts

Sep 25, 2013

SAGICOR Life Jamaica plans to expand its Jewel resorts through acquisitions in the Caribbean.

The financial conglomerate, which yesterday launched an initial public offering (IPO) of shares in Sagicor Real

Estate X Fund, expects income from its properties will help fuel its expansion.

"Those hotel properties are going to give us an income boost in the next three to four years and out of that we are hoping to pick up some good opportunities in the rest of the Caribbean," said Richard Byles, president and chief executive officer of the Sagicor Life Jamaica. "Expansion outside of Jamaica is an eventual plan, not an immediate one."

Jewel Runaway Bay Beach and Golf Resort is expected to reverse its loss position by the end of this year and Jewel Paradise Cove Beach Resort and Spa, the wellness outfit, is expected to turn profit in 2014.

At the same time, Sagicor X Fund's prospectus estimates that net income from the three hotel properties — which include Jewel Dunn's River Beach Resort and Spa — will grow from US$2.6 million in 2012 to US$15 million in 2017.

The real estate portfolio's non-hotel properties — totalling nine industrial and warehouse properties as well as office and retail business properties, which comprises commercial properties such as the R Danny Williams building, the Sagicor Sigma building in New Kingston, and industrial parks on Marcus Garvey Drive in Kingston and in Freeport, Montego Bay — is also expected to see higher income within four years.

Projections place net rental income in 2017 at $463 million, up from $320 million this year.

The proceeds of the IPO will be used to purchase units in Sagicor Sigma Real Estate Fund and develop a water park at Jewel Runaway Bay.

This water park that is to be developed will act as a profit centre, which can also be accessed by customers who aren't guests at the hotel, according to Jermaine Deans, senior manager asset management solutions, treasury and capital markets at Sagicor Investments.

The IPO is offering 200 million ordinary shares (or 20 per cent of the company) at $5 each, of which 100 million stock units are reserved for subscription by Sagicor Sigma Unit Holders at $4.95 a share.

The company may also increase the offer up to 500 million shares (50 per cent of Sagicor X Fund) should demand exceed the target of $1 billion, but Sagicor Jamaica will hold on to a special share, which carries 51 per cent of the voting rights in the company, to ensure that the "structure of the investment is not subverted by investors who may acquire substantial interest in the company", according to the market prospectus.


Source:
SHAMILLE SCOTT Business reporter scotts@jamaicaobserver.com
Jamaica Observer
Wednesday September 25, 2013

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