“Handing over of the buildings by the contractor will be in stages, scheduled for August 10, August 20 and mid-September. The Management team is now in place and support staff have been recruited to deliver a new experience in student living and to welcome the first batch of 576 students at 138 Student Living in early August 2015,” John Lee, Chairman of the company advised shareholders recently in the release of their June quarter financials.
Based on the completion the units, the company looks set to earn around $80 million in profit in its first full year of operating, well above a loss of $71 million that was projected in the prospectus. By year 2 profits should be hitting the $120 million mark or 30 cents per share, on the assumption that the exchange rate will remain relatively stable versus the US dollar.
Phase 1 of the Construction commenced September 2014 and is being financed by a joint $1.35B loan from Jamaica Mortgage Bank (JMB) and National Commercial Bank (NCB) and from proceeds of the public share issue of more than $500 million raised. Long term funding, by way of a bond, to repay the construction loan received from Jamaica Mortgage Bank and National Commercial Bank has been secured and will be paid on the completion of the buildings, Lee stated.
Construction of phase 2 consisting of another 576 rooms is scheduled to commence in September 2015 and will come into operation in August 2016. Negotiations have commenced with the preferred contractor which should lead to a final construction contract.
The company has signed a new concession agreement with UWI Mona for the restoration and
The company incurred cost on construction of just over $1 billion up to June that was partially financed by $617 million in loans.
The company has not yet commenced operation, as such there is no income statement as all cost is capitalized as a part of the construction expenditure.
Profit or loss| The company had projected rental income of $335 million based on the exchange rate being at $122 by September 2015 and J$131 by September 2016. Nevertheless, rental income is more likely to be in the region of $320 million, assuming all rooms are rented for 12 months. On the plus side, the cost of electricity that was projected at $67 million may come in under that amount with the fall in the cost of electricity since last year. Interest cost was projected at $270 million but that seems to be far over the actual figure that is likely to be incurred and charged against income in the year to September 2015. Actual interest plus preference dividend chargeable against income in 2016 is likely to be the order of $100 million based on the amount borrowed to complete phase 1 and the issued preference shares of $168 million.