Jamaican Teas adds new line of business: real estate
Published:Sunday | December 25, 2011 | 12:00 AM
Sabrina Gordon, Business Reporter
Tea-producing company Jamaican Teas Limited is diversifying into another line of business, the residential real estate market with plans to develop 18 studio apartments in Kingston come next year.
The project represents a J$120-million investment for Jamaican Teas.
"The project is relatively small so the risk is not so great, and the size and price make it relatively attractive to sell," said John Mahfood, chief executive officer of Jamaica Teas.
Each studio will be 650 square feet in size.
Mahfood said the less than half an acre property located on Kingsway Avenue, beside Devon House, was acquired recently.
While Mahfood did not disclose the acquisition cost for the property he said it was included in the overall projected development cost of $120 million.
"We are now preparing the plans, but expect them to be pretty nice apartments, and we are looking to build by mid next year," said Mahfood.
Completion is expected by the end of the calendar year.
Mahfood said the going price for the units will be J$15,000 per square feet with the target market being young professionals. At that quoted rate, each studio will cost J$9.75 million.
"These are smaller starter units, good for young professionals who are looking to own their first piece of real estate," said Mahfood.
"With the amount one can get from a National Housing Trust loan and say a 10 to 15 per cent deposit, I don't see it being a heavy burden on two young professionals," Mahfood explained.
The contractor for the project is still to be determined, but Jeremy Milligan will act as the architect.
Mahfood said the project will be financed using a combination of company resources and bank loans, although he declined to comment on the specific mix of debt and equity.
"We are always looking and believe there is a strong demand for that type of real estate," said Mahfood, explaining the company's move into this new venture.
Though largely a tea company, Jamaican Teas also has been on a drive to diversify its business.
In July of this year, it contracted leading snack producer Jamaica Producers to make banana chips and cassava chips packaged under its Caribbean Dreams brand.
It operates in the retail market with two supermarkets, JRG Shoppers Delite, which retails household and consumer products, and Montego Bay-based supermarket Bay City Foods Limited.
The company had also disclosed its intention to enter the coffee market with its own branded instant and ground products, but that project is currently on hold.
Jamaican Teas Limited is a 44-year-old company which started out as Tetley Tea Company, but was renamed ahead of its going public last year.
In 1995, with Mahfood taking control, its product range was expanded under the Caribbean Dreams brand.
To date, the company has over 40 different types of teas in its portfolio, and is the largest producer of teas in the Caribbean under its own brands, as well as under contract for different companies. It supplies markets in the Caribbean and North America.
Since listing on the junior market, Jamaica Teas stock has been fairly actively traded. The stock trades at about J$5.15, up from about J$3.86 at listing.
Its over 167 million ordinary shares is value at $864 million on the market.