MoneyMasters has created a real estate company that it aims to capitalise with equity through the private market, and has hired former mortgage banker Dr Patrick Thelwell to lead the new operation.
The newly launched Money Masters Real Estate & Infrastructure Investments Limited, or MMREIF, will seek to raise $1.5 billion in a private placement of shares, and then in a year seek to go public by way of listing on the Jamaica Stock Exchange, JSE. The private placement will open in November 12 and close on December 10.
MoneyMasters Limited, a securities firm led by President Claudette Crooks, will act as the lead broker to the private placement for its subsidiary. Institutions and accredited investors viewed as wealthy are eligible to participate in the offer in $10-million tranches.
Crooks told the Financial Gleaner that the placement would form the capital structure of the new company, with MoneyMasters itself pumping in about five per cent in equity.
“MM Investments will invest $90 million. Assuming we raise $1.5 billion in the private placement, we would have a minimum of five per cent shareholding,” she said in response to queries at the end of the online press conference on Wednesday.
MoneyMasters Investments Limited is a holding company which currently has two wholly owned subsidiaries, MM Real Estate Holding and Money Masters Private Equity. MM Investments is the founding shareholder in MMREIF and also holds management agreement for the REIF, which is incorporated in St Lucia. Under this agreement, it hired a CEO to run the company.
Crooks says MMREIF shareholders will benefit from the investment by way of dividends and capital gains.
She explained that the company is not a real estate investment trust and therefore would not earn income from rental, but rather income flowing from infrastructure projects for which it will provide backing. Any real estate it personally holds would be for sale rather than rental management. She added that the company will seek to acquire and develop property.
“There are no tenants. We are not targeting that end of the real estate market,” she said, adding that the company would engage in financing and direct investments. “We have live income flows that come from real estate projects, which were financed.”
“It isn’t a REIT, but a limited liability company focused on investing in two specific asset classes, that of real estate and infrastructure developments,” she said, adding that the capital raised by MMREIF will go towards these projects.
The financing deals “typically involve securitisation or structured debt or hybrids with specified exit clauses,” she added on Thursday in response to Financial Gleaner queries.
At the launch, Thelwell, the CEO of Money Masters REIF, said that the company has already started operations, with $4 billion in “live projects” financed.
The portfolio operates on limits,with up to 40 per cent allocated for real estate development projects, 30 per cent for structured financing, and the remainder for infrastructure projects. These percentages are subject to change with the emergence of opportunities.
Another $15 billion to $20 billion of projects are under negotiation for financing.
The projects, situated all across Jamaica, are being undertaken by both public-sector agencies and private developers. Government Minister Pearnel Charles Jr, who heads up the housing, urban renewal, environment and cimate change ministry, was among those participating in the launch of MMREIF on Wednesday.
“Investors that come with us on the ground floor will get an internal rate of return of 24 to 26 per cent over three years,” said Thelwell, who ran the state-owned Jamaica Mortgage Bank as general manager until 2013 and was later named its chairman.
Crooks added later that MMREIF opens up a new avenue for investors at a time when the pandemic has led to a pullback from other asset classes.
“The bond market is challenged and the JSE is challenged. The asset classes of real estate offer an opportunity for growth and an attractive return on investment and stable income,” she said.
MoneyMasters Chairman Michael McNaughton said real estate is one of the safest and most stable ways of generating above-average returns. He indicated that after the private placement, MMREIF would seek to list on the stock market in 2021.
