CEO of 138 Student Living Jamaica, Cranston Ewan, says the company is committed to paying shareholders regular dividends after it reduces some of its debt.

138 Student Living is a real estate development company primarily in the student rental space. The company has built and restored four residence halls on the University of the West Indies, Mona campus.

The company recently announced an additional public offer to raise up to $3 billion to help pay down some of its debts and fund further expansion.

Speaking on Taking Stock with Kalilah Reynolds, Ewan noted that the company took on roughly $4 billion in debt to build the halls.

According to Investment Banking Manager at GK Capital, Dameon Creary, 13SL would use roughly $1.5 billion from the APO funds to repay debt. The men said the debt reduction would free up profits, which could be paid to shareholders as dividends.

“When all these towers were built, 138SL took on a lot of debt and so on our books right now we have in excess of $4 billion worth of debt,” Ewan said.

“And so what happens is that a significant portion of our cash flows goes towards
servicing debt and making interest payments,” he added.

According to Creary, if the APO is successful and the company is able to reduce its debt, it would free up to $250 million on the company’s books.

“In terms of numbers, it should free up approximately or over $250 million in terms of principal payments and interest payments, and of course, it would also impact the income statement so you should expect a larger net profit,” he said.

“The main impact will be that it would unlock some cash flows which would allow the company to pay dividends which is the primary purpose of this APO,” he added.

138SL listed on the Jamaica Stock Exchange in 2014 and paid its first dividend to shareholders in February of this year.

The CEO said the company plans to pay out up to 90% of its profits as dividends once its debt is reduced.

138 Student Living has a 30-year concession deal with the UWI, which will see the University compensating the company if occupancy levels fall below 90%.
Ewan said the deal came in handy during the pandemic when students weren’t allowed on campus and were doing virtual learning.

However, according to the CEO, the business has picked up again. He said occupancy levels so far in 2023 are well over 93%.

“There’s actually excess demand. We don’t have enough rooms to house all the students looking for a space,” he said.

Ewan said that 138SL is considering further expansion to meet the current demand in the student housing space.