Lakes pumping $2b into East Kingston apartment complex
Sherbourne Limited, a development company owned by Richard Lake and family, has launched construction on a $2-billion project that will provide housing in downtown Kingston.
The company is banking on tax incentives to temper the cost of financing and enhance its returns from the 10-storey high-rise that’s due hit the market in two years.
Kingston Two Apartments, or K2, as the development is called, is to be constructed on approximately two acres overlooking the Kingston Harbour.
Sherbourne Limited, whose principal director is Michael Lake, will invest $2.1 billion in the urban renewal project that will provide 119 apartments, 54 of which will be studio units. The apartment prices range up to $35 million, and delivery date is set for fall 2025.
Sherbourne Project Manager Gina Harrison told the Financial Gleaner that “two major banks” have given an indication that they would “either finance outright or issue urban renewal bonds with tax free interest income” and that “should the project be approved under the Tax Incentive Programme the bonds would reduce financing costs”.
“The property falls within the special development area of downtown Kingston and would meet the requirements for the Tax Incentive Programme for urban renewal. An application will be made for an approved developer status under the Urban Renewal (Tax Relief) Act,” she said.
Under the urban renewal tax incentive programme, referred to as TIP, investors may receive exemption from transfer tax and stamp duty, and tax credit of 33.3 per cent on capital investment estimated to exceed the income tax payable on the projected net profits.
The project manager said acquiring the three lots, spanning 1.6 acres, in Bournemouth Gardens, was the first step towards execution of the project. The property is located within the Kingston 2 zone and the apartments will touch on Fairbourne Road, Eastbourne Road and Michael Manley Boulevard.
“Bournemouth is a neighbourhood with a long history that is convenient to downtown, uptown and NMIA [Norman Manley International Airport],” Harrison said.
The management of the K2 project will be assigned to affiliated company, Island Homes Limited, whose directors include Michael Lake and Richard Lake.
The companies belong to the Lake Group companies whose CEO is Lisa Lake. Richard Lake is principal director of Aerocon Construction/Island Homes Limited.
Incorporated in 1971, Sherbourne Limited is a registered developer of residential real estate. Its past projects include Sherbourne Heights in Stony Hill, St Andrew.
According to Harrison, the target market for K2 is buyers who “believe in the renewal of downtown and are excited at the future prospects”.
“Living on the Kingston Harbour, the accessible location and lower than uptown pricing are the key attractions,” she added.
Sherbourne has budgeted for a return of investment of “20 per cent” on the K2 project.
“This is the only project at this time for Sherbourne. Its success will drive others, both from Sherbourne as well as other developers,” the project manager added.
The units are priced at $16.2 million f’or studios, and $28.8 million to $34.6 million for two-bedroom units.
“We will launch our pre-construction marketing campaign after the Christmas season. The theme is ‘Downtown Reimagined’,” Harrison said.