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Stanley Motta inks agreements with tenants amid COVID-19

Chairman and CEO of Stanley Motta Limited Melanie Subratie indicated that the company is working closely with its tenants to ensure business continuity under COVID-19 conditions.

In the company’s just published annual report, Subratie also said the absence of short-term debt has left the company well-positioned to weather the period.

She said, “the COVID-19 pandemic’s economic repercussions have brought into sharp focus the need to preserve value. Most vehicles that own real estate are heavily indebted. However, all Stanley Motta’s debt is long term, and so there is little risk to the business from short term debt given the current economic fallout.”

“We will continue to monitor the situation closely…and support all our tenants to the best of our ability, and safely ensure the best possible return for our shareholders.”

– Chairman and CEO of Stanley Motta Limited Melanie Subratie

She said this will “allow us the flexibility required to weather the economic downturn that is currently being faced by the world’s economy.”
In the company’s first quarter advisory to shareholders, the chairman says payment plans have been mutually agreed, and all tenants have committed to honouring their rent commitments.

Property owned by Stanley Motta, 58 HWT is located on approximately six acres of land in Kingston.Units 1,2, 3 and 4 are owned directly by Stanley Motta Ltd, and Unit 5 is owned by Unity Capital Ltd, a St Lucian-based company which is wholly owned by Stanley Motta Ltd.

For the quarter ended 31 March 2020, total income increased by 10.3 per cent to J$112.0 million over the same quarter in the previous year, due to an increase in rental space and the devaluation of Jamaican dollar to the US dollar over the same period which moved from an average of J$125.0 to US$1 at 31st of March 2019 to an average of J$134.0 to US$1.0 at the 31st of March 2020.

Inside Stanley Motta’s 58 HWT business process outsourcing building.

Net Operating Income (NOI), which is defined as rental income less operating expenses, was J$76.0 million for Q1 2020, a $7 mllion or 8.48 per cent reduction from Q1 2019 (J$83.0M) and a $12.6 M or 14 per cent reduction from Q4 2019 (J$88.6M).

Subratie said net operating income is expected to increase as the company begins to benefit from the increased rental income from additional rental space.

She said in first quarter’s report, “Within the complex, we are supporting all endeavors to reduce the risk of exposure to those persons using the facilities.

“Additional costs in relation to cleaning and repairs and maintenance is anticipated but are not expected to materially affect our results. In addition, to proactively managing our cash flow and liabilities, some capital projects for the year have been deferred to 2021.”

She explained that as the company’s debt is all long-term, Stanley Motta will not be impacted by any short-term financing issues which would traditionally impact REITS, as seen in other global markets.

The chairman stated, “We will continue to monitor the situation closely, consistently plan for contingencies, mitigate risks, and support all our tenants to the best of our ability, and safely ensure the best possible return for our shareholders.”

Administrative expenses for the first  quarter increased from J$18.6M to J$36.0M over Q1 in 2019, primarily due to SEZ fees and associated SEZ expenses paid in 2020 ($3.1m).

There were also  additional depreciation costs associated with capital works done in the previous year ($1.6m); an unexpected expense in repairs and maintenance ($2.3M); and additional rent and expenses for space that we are now subletting ($4m), and timing related booking of expenses ($2m).

The administrative expenses in Q1 2019 had been offset by a $5m forex gain in 2019 which was only $2m in 2020.

The company finished its financial year, ended December 31, 2019, with profit of $180.2 million, compared to $1.89 billion in the year prior. EPS was substantially greater due to a substantially higher revaluation gain of J$1.9 billion.

Revenue for 2019 was $357.7 million, compared to $214.2 million the year before. Assets remained at $4.1 billion in value, year over year.

The quarter ended with a net profit margin of 56.4 per cent, reflecting increased operational efficiencies and timely collection of rent.
At the end of this quarter, investment properties stood at J$ 4.8 billion, reflecting a revaluation increase of 3 per cent.

The company finished its financial year, ended December 31, 2019, with profit of $180.2 million, compared to $1.89 billion in the year prior.
EPS was substantially greater due to a substantially higher revaluation gain of J$ 1.9 billion.

Revenue for 2019 was $357.7 million, compared to $214.2 million the year before. Assets remained at $4.1 billion in value, year over year.
Subratie said revenue for the remainder of 2020 is expected to be stable excluding significant fluctuations in the foreign exchange. The collection of rent in US dollars will continue.