Barita leans on real estate to buttress revenue
Published:Wednesday | November 22, 2023 | 12:09 AM
Barita Investments Limited made early earnings of $3.4 billion, but it marks a decline of 20 per cent, due to underperforming core revenue.
The investment company’s total revenue for year ending September amounted to $9.1 billion, a marginal increase from the previous year’s $9 billion. However, interest income plummeted by about two-thirds within a market beset by high interest rates.
“This reflects the continuing influence of the Bank of Jamaica’s restrictive monetary policy measures. Consequently, interest rates on funding liabilities remain elevated across the sector, contrasting with the lower yields on the stock of earning assets held by securities dealers,” said Barita Chairman Mark Myers.
The company leaned on its largely gains on investment holdings to offset the decline in core revenue.
Barita said that the bulk of the gains related to real estate fund. It amassed $4.4 billion in gains, up from $3.4 billion a year earlier, which contributed to the company posting a decent if reduced profit.
Over 12 months ending August, the real estate fund racked up returns of 233 per cent, which was substantial compared to market peers. In 2022, that real estate fund made returns of 1,433 per cent, again reflecting increased net asset values of real estate added to the fund.
Barita ended the year with $1.8 billion in cash, up from $1 billion. This growth was primarily attributed to a $7.6 billion debt facility raised during the fiscal year.
Cash flow generated from operations was slashed nearly in half to $13.5 billion from $26.2 billion a year earlier.
“Current market conditions present challenges for businesses across several sectors, including the financial industry,” said Myers.
Barita’s total assets stood at $128.7 billion, representing a 17 per cent increase over the previous year. The current asset base is more than six times the company’s $19 billion size when it acquired by Cornerstone in 2018.