Sygnus Real Estate Finance Ltd. Records Loss, But Investment Momentum Builds

  • For the six months ended February 29, 2025 (6 Month FY 2024), Sygnus Real Estate Finance (SRF) reported a net loss of J$197.45Mn compared to a J$320.13Mn loss the year prior, primarily due to an increase in its stake in the One Belmont property.
  • Interest income rose by 21.9% to J$107.41Mn, up from J$88.12Mn for the 6 months ended February 2025. However, a sharp 145.9% increase in interest expense led to a net interest loss of J$215.85Mn, which widened from J$87.75Mn in the comparable period prior.
  • Despite the weaker net interest income, total investment income (core revenues) improved to J$26.59Mn, reversing a loss of J$55.31Mn in 6M FY 2024. This turnaround was driven by lease and other income, a gain on disposal of financial instruments of J$33.73Mn, a gain on acquisition of shares in Joint Venture of J$162.20Mn and share of gain on joint ventures of J$39.26Mn.
  • The gain on acquisition of shares reflects SRF’s strategic move to increase its stake in the 9-storey One Belmont commercial tower to 86% from 70%. SRF also acquired a 71% stake in a newly formed joint venture—5658 LMR Limited—whose assets include two resort villa properties in Ocho Rios, St. Ann.
  • As SRF transitions into its second investment life cycle, investment activity is expected to ramp up. For the period, the Group deployed J$1.39Bn in new investment commitments—an increase of 119% (or J$753.09Mn) versus J$633.00Mn in the prior year. This was mainly driven by the investment of J$974.36Mn in 4 Real estate investment notes (REINs) during the period, SRF’s acquisition of additional shares in an existing joint venture, and property additions to strategic assets.
  • SRF is executing on its strategic objective of seeking to substantially increase its investment in new REINs at higher interest rates with funds generated from ongoing investment exits. The entity has sold investment properties located at 56 and 58 Lady Musgrave Road, and the Hillcrest, Spanish Penwood in the past year. This resulted in total assets slightly decreasing by 0.2% but was offset by an uptick in REINs (+25.3%) and joint ventures (+64.0%).
  • SRF’s stock price has depreciated 17.1% year-to-date. The stock price closed Wednesday’s trading session at $8.14 and currently trades at a P/E of 11.97x, above the Main Market Real Estate Sector Average of 6.85x.

(Sources: Sygnus Real Estate Finance & NCBCM Research)