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NCB Capital creates real estate fund using bank branches

NCB Capital Markets Limited is raising $3.19 billion through an offer for investors to seed a new a real estate fund with a portfolio of tenanted assets that include NCB bank branches and car parks.

The offer has been on the market for a week and is expected to close today, March 22.

The NCBCM Real Estate Unit Trust will hold commercial and residential assets, which the prospectus notes will primarily be local real estate, but include regional assets.

The offer “of early participation in the seeding of the portfolio” at $10 per unit, allows investors to put money in for a minimum holding period of one year, in limited capacities up to $1 billion of the fundraising target. The remaining $2.19 billion will have a holding period of three years. Early redemption will result in a charge of up to 4.0 per cent.

Cash distributions are expected to be within the range of 7.5 per cent.

“Dividends earned from this investment will be used to settle ongoing expenses of the real estate portfolio as well as provide quarterly cash distribution to unit holders at the discretion of the trustee and investment manager,” said NCB Capital.

The real estate fund has a net asset value of about $4 billion as of December 2022, according to documents seen by the Financial Gleaner.

The real estate assets are held through a company called Origo that was created by NCB Capital to hold and manage specific investments.

“NCBCM Real Estate Unit Trust portfolio will use funds raised through the special offer to purchase ordinary shares in a real estate leasing entity, Corp REIT IC of Origo Holdings ICC,” stated the invitation document.

In March 2022, Corp REIT IC entered into a three-year “triple-net leasing arrangement” with National Commercial Bank Jamaica Limited, NCBJ, to sell and lease back several of its branches and car parks. NCBJ and NCB Capital Markets are respectively the primary banking and investment banking arms of the NCB Financial Group.

At the end of the three-year period, Corp REIT IC has the option to renegotiate and renew the lease terms with NCBJ.

The NCB assets included in the arrangement span over 500,000 square feet of office and parking space. They include branches in Kingston – at Duke Street and the car park, Half-Way Tree, two locations on Knutsford Boulevard, Trafalgar Road and its car park, and Matilda’s Corner; at Perth Road in Mandeville, Manchester; at Manchester Avenue and its car park in May Pen, Clarendon; and the Main Street branch in St Ann’s Bay, St Ann.

In 2021, NCB Capital CEO Steven Gooden spoke generally about Origo, saying it has a platform that manufactures a variety of tailor-made products, such as bonds with higher than usual returns. NCB Capital also manages Stratus, which aims to offer higher than usual returns to investors.

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