Barita Investments Limited expects affiliate MJR Real Estate to start developing its property holdings as early as 2024, and for the returns from sales to pour in beginning in three years’ time.
“As we progress our local and international partnerships, the nature of the economics emanating from the real estate holdings will evolve from current revaluation gains towards realised, cash-based revenues following the financing, development, and sale of the various real estate development projects over the next three to seven years,” said Barita Chairman Mark Myers in statements accompanying financials.
Barita’s investment strategy and capital management remain largely unchanged since its 2022 shift to what Myers called “alternative investments”.
The group uses MJR as an off-book entity to build out its alternative investments in real estate.
“Gains related to our real estate holdings are expected to remain a material component of the net operating revenues of the company over the medium to long term,” Myers said.
The Barita Unit Trust Real Estate Portfolio grew by 1,433 per cent over a one-year period ending January 2023 in an otherwise challenging market. Barita explained that the rise was due to its unit trust investing in MJR, which is controlled by parent company Cornerstone. The net asset value of the unit trust stands at $5.6 billion.
MJR has poured billions into property acquisition, including Reggae Beach, 286 acres; Green Castle, 1,600 acres; Eden Gardens, two acres; the former Kingston ice factory, three acres; and Windsor Estates, 100 acres.
“The performance of our real estate fund is largely a function of the appreciation of the properties in the real estate vehicle, MJR, in which the fund is invested. This was largely driven by the strategic negotiations of MJR’s investment manager which have culminated in executing on opportunities to acquire quality assets at attractive, discounted prices relative to intrinsic value, and taking further preparatory steps towards unlocking future value,” said Jason Chambers, chief investment officer of Cornerstone and Barita Investments, in response to the Financial Gleaner.
“The development of our real estate holdings will be executed over the long term as we progress our local and international partnerships to bring global best-in-class capabilities to bear on our real estate development plans, which we expect to realise over the next five to seven years, with the first of these developments expected to start in financial year 2024,” Chambers said.
Going forward, the unit trust real estate portfolio will focus on development financing. It will invest in senior secured debt, mezzanine and equity instruments used to finance the construction of real estate projects; and acquire additional greenfield and brownfield properties.
Barita Investments reported a 20 per cent rise in profit in the March quarter to $1.5 billion on revenue of $3.1 billion.