KPREIT’s  Profit Growth Muted by Rising Costs 

  • Kingston Properties Limited (KPREIT) reported a net profit of US$1.00Mn for the three-months ending March 2025 (Q1 2025), representing a 5.8% increase compared to the same period last year. This performance reflected strong revenue growth, which was largely muted by rising costs. 
  • The expansion of KPREIT’s property portfolio and effective property management led to higher rental income and increased property values. Rental income for Q1 2025 totalled US$1.38Mn, reflecting a 24.4% increase compared to Q1 2024. This growth was primarily driven by the addition of the 2530 Aztec West Business Park, a fully tenanted 20,000-square-foot office building in the UK and the Duke Street buildings in Jamaica, as well as improved rental rates across several properties in the portfolio.
  • The growing rental income was met by a 50.0% increase in operating expenses to US$0.58Mn, driven by higher staff costs, increased professional fees related to the expansion of the UK portfolio, as well as broker fees and legal costs associated with leasing vacant spaces in Jamaica and the Cayman Islands. On the balance of faster growth in operating expenses, operating profits increased by 10.6%, which is lower than revenue growth.
  • Lower fair value gains and higher net finance costs also contributed to the muted profits. The company’s fair value gains of US$0.37Mn for Q1 2025 were 37.3% lower than in Q1 2024 despite recognised gains after reclassifying an asset for disposal. Meanwhile, net finance costs increased by 18.1% to US$0.39Mn due to the growth in its debt portfolio, which funded the increase in its real estate assets under management. Notably, the company’s entrance into the UK via Aztec was financed by a US$21Mn senior secured term facility from CIBC Caribbean that also refinanced existing debt1.
  • KPEIT’s stock price has declined by 0.2% year-to-date, closing at JMD$9.41 as of Tuesday. At this price, the stock is trading at a price-to-earnings (P/E) ratio of 9.9x, which is lower than the Main Market Real Estate Sector’s average of 11.2x.

________________________________
1The move aligns with KPREIT’s growth strategy to diversify geographically and optimise funding.

(Sources: JSE & NCBCM Research)