Stanley Motta Limited’s newly completed office tower is starting to pay off. The 110,000-square-foot PBS building at the company’s 58 Half-Way-Tree Road technology park drove a 60% jump in quarterly profit, with net profit for the three months ended March 31 rising to $145.4 million from $90.7 million a year earlier. Rental income climbed 45% to $237 million, and earnings per share rose to $0.19 from $0.12. The company has secured commitments for all available space in the new building.
The expansion has also reduced one of the company’s longstanding risks: over-reliance on a single tenant. According to Barita research analyst Shane Bennett, the largest tenant’s share of rental income has fallen from 78% to 57%, with new occupants including a technology company and a government entity joining longtime tenant Alorica. Operating profit rose even faster than revenue — up 75% to $188.4 million — as administrative expenses fell.
The catch is debt. Finance costs jumped to $41.8 million from $13.2 million a year earlier, partly because a payment holiday on the company’s largest loan has ended. With construction winding down (property investment fell to roughly $54 million from $134 million), the company is shifting from a building phase to an income-generation phase. The next test, Bennett notes, is keeping rental income growing fast enough to comfortably service that debt — which, on Q1 numbers, it currently does, though with less margin for error than before.
Read more: Jamaica Observer