Oct 2012 Financial News

Sagicor open to new hotel acquisitions

Oct 12, 2012

Sagicor Life Jamaica is on the hunt for acquisition prospects in the resort sector to top up the two hotels in its managed portfolio, according to Rohan Miller, investment executive.

The interest in resort assets is fuelled by expectations that this year and next, the resort properties will generate up to half the net investment income of all real-estate assets held under entities such as Sagicor Pooled Investment Funds Limited, and the Sigma unit trust funds.

Miller said Sagicor plans to grow the resort segment through acquisitions, either in Jamaica or the Caribbean, as well as expansion.

The acquisition targets should be 200 rooms or more and similar to the two Jewel resorts, said Miller, executive vice-president and chief investment officer for Sagicor Jamaica Group.

Sagicor is currently pouring US$5.5 million (J$495m) into upgrades for adult-only Jewel Dunn's River Beach Resort & Spa and family-oriented Jewel Runaway Bay Beach & Golf Resort.

The asset value of the two properties represents 45 per cent of the total value of the Sagicor's managed real-estate portfolio, Miller said.

The two hotels represent 516 rooms combined, and Sagicor is planning to add more rooms to SIL's portfolio as opportunities arise.

"The investment strategy of the real-estate portfolio is to beat inflation through the combination of capital appreciation of the real estate property and a steady stream of rental income," Miller told the Financial Gleaner.

"The strategy also includes targets of having over 40 per cent of rental income in US dollars and to have a diversified portfolio of Jamaican and Caribbean real-estate assets," he said.

Based on these considerations, Miller said, Sagicor's preference is resort property investments.

"... Tourism-related investments offer the best pathway to achieving some of the objectives," he said.

"We hope to add more rooms, ideally through new acquisitions, in the short to medium term."

The current focus, however, is on upgrades and marketing.

The Jewel hotels are held by Sagicor but managed under contract by Texan company Aimbridge Hospitality.

The initial refurbishing cost for Jewel Dunn's River was approxi-mately US$2m.

The budgeted refurbishing cost for Jewel Runaway Bay - formerly operated as Breezes Runway Bay until Sagicor bought out the interests of former partner SuperClubs - is US$3.5m.

In April, Sagicor and SuperClubs jointly announced the sale of the 226-room to Sagicor. The hotel was rebranded on June 1.

"The property remains open and will convert to a family resort in November for the upcoming season," said Miller.

The sale marked the return of the hotel to the insurance company's property portfolio. SuperClubs previously bought the hotel from Sagicor in 2003.

Miller said the hotels are held under the investment portfolio managed by the insurance group and are not directly owned by Sagicor Life Jamaica.

"The resort properties will comprise approximately 45 per cent of the real-estate investment fund portfolio and are expected to contribute between 45 per cent and 50 per cent of the net investment income of the real-estate portfolio," he said.

Sagicor Group manages a portfolio valued in total at J$258 billion, inclusive of J$74 billion of pension funds.

The mortgage and real-estate segment - comprising hotels and commercial and warehousing properties - made up 5.54 per cent of the pooled pension funds portfolio in 2011.


Source:
Avia Collinder, Business Writer
business@gleanerjm.com
Jamaica Gleaner
Friday October 12, 2012

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