7 months ago
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Real estate developer 138 Student Living Jamaica is again eyeing the University of Technology, Jamaica to grow its business.
The developer of student housing currently operates only at the Mona campus of the University of the West Indies, where it manages more than 1,400 rooms under a three-decade concession agreement.
CEO Cranston Ewan said the possible expansion to UTech was one of several initiatives under consideration, but also noted that the negotiations with the university were not yet at a stage where the company could disclose any details.
“We’re having deeper discussions on that; and wherever it will land we’re not sure as yet, so we were not in a position to have a meaningful discussion with our shareholders,” Ewan said.
138 Student Living recently floated new shares on the market for equity capital, but Ewan said the additional public offering, APO, was not fully subscribed, which meant the company had to reassess its strategy since it could not go as far as it wanted in reducing company’s debt load.
“We had intended to use a significant portion of the funds raised to pay down the debt, and some would go towards growth opportunities in front of us,“ he said.
Instead, the funds raised will be used for just debt servicing. The student housing developer’s borrowings currently stand at around $4 billion on which it shells out interest payments of $360 million per year.
Brokered and arranged by GK Capital Management Limited, the Student Living’s APO offer was extended by two weeks amid poor uptake. The company was hoping to raise $2.15 billion, with the prospect of upsizing the offer to $3.225 billion. But Ewan said they only raised $510 million at the close of subscription last October.
The company’s turnover comes from the 1,464 rooms it operates at four locations on the UWI Mona campus. Under the current concession agreements, the capacity exists to build another 842 rooms, according to the APO prospectus, but Ewan says for the time being those projects are on hold.
“Those projects are not on the back burner, so to speak, but, rather, on pause,” he said, alluding to the buildout of a vacant lot at UWI Mona.
Last week, the company reported to shareholders at its annual general meeting that the 2023 financial year was the best ever for the company, with 138SL generating $1.39 billion in total revenue that put the student housing company back above pre-COVID-19 levels. Occupancy is currently at about 93 per cent, according to the latest company reports.
Ewan told the Financial Gleaner that the company has consistently made profit every year since 2019, despite the effects of the pandemic. For the most recent quarter ended December 2023, the company generated just under $71 million in profit, which underperformed the year-prior quarter by 12 per cent.
As for the company’s expansion plans, it’s been eight years since 138 Student Living first spoke of its interest in providing housing for UTech students.
In late 2015, the company disclosed a $2-billion plan for the Papine, Kingston-based campus that involved the development of four to five towers, with 144 rooms per block. The dorms were to be built on three acres of land that 138 Student would lease for the project. And the rooms would similarly be operated under concession from UTech.
In all, the founder of 138 Student Living and then chairman of the company, John Lee, had estimated that the development would provide 600 rooms, with the capacity to house around 1,200 students.
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