Jamaica Gleaner / The luxury villas to be developed by KLE Group in St Mary missed a midyear start for construction, and have been pushed back to early next year.
KLE Group CEO Gary Matalon is blaming setbacks on design changes requested by planning authorities.
“That is where it took a little more time than it should have because while we were in the design phase there were some changes that the authorities required, such as waste water disposal,” he told the company’s annual general meeting on Tuesday.
“Effectively we had to redesign the whole system in order to comply with the regulations,” he said.
The impending start of the Bessa project comes after a year of restructuring and turnaround for KLE. The group made a profit of $164 million last year compared to a loss of $55 million the year before.
Its recovery continues with half-year profit at June 2017 amounting to $55 million.
KLE Chairman David Alexander Shirley says the decision to monetise the Tracks and Records brand through the franchising arm, FranJam, is paying off.
“As a team, we faced tremendous difficulties during that financial period. Thankfully, we were strategically able to restructure our balance sheet. We’re thankful that we created that asset and that the auditors saw value in that asset,” Shirley told shareholders.
KLE is banking on Bessa to boost its revenues. The company has a 25 per cent stake in the project that sits on a 8.14 acre site right next to world famous Golden Eye, the storied retreat of James Bond creator, Ian Fleming.
KLE is a minority partner in Bessa, along with Sagicor Life Jamaica. However, the company was hard-pressed to deliver the US$350,007 that its agreement with Sagicor required, and has farmed out a portion of its financial obligation to an unnamed group of investors, dubbed the ‘Participants’. Matalon identified them only as investors inside the KLE Group.
Quizzed further about the KLE stake in Bessa, Matalon said KLE has also put “sweat equity” into the project.
“You justify that sweat equity by the fact that we acquired the land applied ourselves to conceptualising the project, doing preliminary designs and making it into a viable business proposal and there is a cost to that,” Matalon argued.
He priced those efforts at around US$200,000.
At the meeting, he assured shareholders that while KLE had been burnt in the past on other investments – an apparent reference to the cancelled gaming partnership with Supreme Ventures – that was unlikely to happen with Bessa.
“We had great ideas and because we are a small company we partnered with larger companies with a concept and throughout the course of execution we lose control of the end-product and it happened with a few investments that we did and we learnt from that. For this particular one we are going to ensure that the end-product and a sales and marketing that the concept will remain true,” Matalon vowed.
Construction of the 54 units at Bessa will start by March 2018. The company aims to sell the units to overseas interests and locals looking for real estate investments.
“We have a waiting list of about 200 people who have expressed an interest and we are only building 54 units so the demand seems to be at this point very strong,” Matalon said.