Now is the time to get real estate, say First Rock directors

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THERE is simple advice from First Rock Capital: Get real assets while you can.

Directors of the investment holding company, Dr Michael Banbury and Ryan Reid sounded the note as their organisation attempts to dive deeper into real estate investments.

“It is time to go and get real estate. As the economy continues to grow, property value is going to go up. When there is sustained economic growth, the real estate and asset prices are going to increase at a rapid pace. You want to catch it now,” Reid said.

“And should the reduction in our debt to GDP ratio accelerate… more cash is going to be available, and that cash is going to be deployed into real assets first,” Dr Banbury followed up.

Insisting that real estate is woefully undervalued in Jamaica, when compared to the rest of the Caribbean, they are positioning the company to fulfill the many potential opportunities that exist locally and internationally.

“We are an investment holding company with a core focus on real estate investments, and we do private equity investments as well. It’s the first company of its kind with this unique structure in Jamaica.” founding Director Dr Banbury stated in an interview with the Jamaica Observer.

“We can always acquire assets, but we are looking at all kinds of assets that can give us risk-adjusted returns for our shareholders.

“We participate in real estate development via equity participation, not debt. We will also participate in income-earning properties both here and in the Caribbean region; so, our shareholders benefit from both the capital gain opportunities and the income stream,” stated Dr Banbury, an eminent medical practitioner and chief executive officer of Medical Associates Hospital in St Andrew.

Reinforcing his view that the price for real estate in Jamaica was low, Dr Banbury, the honorary consul for Indonesia, said that even in a climate in which the buyer and the seller can gain, property prices remain “ridiculously” low.

“Real estate in Jamaica is definitely undervalued. When you compare it with other places in the Caribbean, like Barbados, The Bahamas, Cayman… significantly undervalued.

“Just looking at the real estate prices in the other Caribbean islands — let’s say, for example, a condominium in the Cayman Islands on the water front can run between US$5 million to US$10 million. We have nothing here of that value… nowhere.”

First Rock’s Chief Executive Officer Reid also emphasised the claim.

“We are significantly underpriced. Just look at the Cayman Islands or the Dominican Republic and you will see. Our challenge in Jamaica is crime and the security cost of owning property.”

Crime, Dr Banbury believes, is at the root of the drawback in Jamaica’s real estate progress — but he believes that there is hope.

“We are an island, we are as beautiful as anywhere else, but what I think affects us most is crime… a lot. The Government seems to be approaching it in a positive way, so we must hope that something good will emerge.

“We are making a serious thrust to attract foreign investors, and they are attracted now; they have been making enquiries. But let’s look at our stock market. It is rated as the number one — performing stock market in the world, yet most if not all stocks are undervalued…including NCB. We are still undervalued when you look at the PE (price earning) ratios and so on. What we are realising now is that a lot of the money is coming in from the Diaspora and from the Caribbean region into the Jamaican stock market. So if companies are undervalued, real estate is undervalued as well.”

The capital deployment strategy is in line with its allocation policy across jurisdictions.

“We are bullish on the Caribbean. Guyana seems interesting right now. Guyana is on its up… on the growth path. They have found oil, their gold reserves are being mined now, and there is little sophistication in terms of financial sector. For instance, they don’t even have a merchant bank or a credit union, things like that — So there are a lot of opportunities. I expect the disposable income to increase as they start to oil and so on. Guyana is very promising. We have already started discussions there”, Dr Banbury went on.

“Trinidad and Tobago is much more sophisticated than Guyana… almost as sophisticated as Jamaica, but we are going to look at the major islands — Cayman, Trinidad, Guyana, and Barbados in particular,” added Dr Banbury.

“I have always wanted to be a part of an investment company from I was a youngster coming up,” he said of First Rock.

The company has a powerful board of directors made up of some of the prominent faces of business management in Jamaica and beyond.

It has spent, according to Reid, the last nine months “aggressively building a pipeline of transactions to ensure that we are can effectively deploy capital.”

With its capital, 64 per cent of the portfolio will be deployed in income-producing opportunities; 23 per cent in development opportunities; and 13 per cent in capital gains opportunities. “We want to ensure that when we deploy capital its heavily weighted on income-producing deals to ensure that we are generating the cash flows to pay dividends to our shareholders,” suggested Reid.

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