With KFC store deal, First Rock freshens outlook on Costa Rica

FIRST ROCK Real Estate Investments is looking to again grow its holdings in Costa Rica through First Rock Latam One SRL, with its newest project being the development of new stores for a KFC franchise operator.

The company is deepening its involvement in the Central American country through investment partner Newmark Group.

First Rock Vice-President of Finance and Planning, Shaun Myers, says through Newmark, the company has access to a US$200-million portfolio which it is looking to exploit.

“With these high-quality, income-generating properties, we will be seeking to syndicate deals with other Jamaican real estate firms to acquire the properties next year,” Myers told the Financial Gleaner.

“We’re always looking to grow. Costa Rica is a jurisdiction that we like in Latin America. It offers very attractive capital appreciation rates on investment properties and we’re able to negotiate unique structures for the deals,” Myers added.

First Rock acquired two parcels of land in Allajuela, San Jose, for the construction of two KFC restaurants. The structures will be leased to Intelectiva Costa Rica SA, the operator of KFC Costa Rica, for a term of 20 years. This will bring to 55 the number of KFC restaurants in the Central American country.

Construction of the first location started a month ago, with a completion timeline of four months, Myers said. Development of the second will begin in another week.

The project is expected to cost US$2.5 million, 50 per cent, or $1.25 million, of which is being financed by BAC Credomatic, one of the largest financial companies in Latin America. Myers would not disclose all the terms of the financing deal, but said that the financing was priced at single-digit interest rate, with a 12-month moratorium on principal payments.

First Rock has chosen Constarq SA to do the construction, a firm that Myers says has a strong track record of building KFC locations in Costa Rica to franchise specifications with relatively short turnaround times.

Regarding First Rock’s holdings in Costa Rica, Myers said the company previously disposed of its two mixed-use offices and warehousing commercial properties just after the COVID-19 pandemic. “Those two units were rented to what I’d consider to be small businesses that suffered a lot through the COVID pandemic. That basically told us that, especially on the international front, we need to find what we call triple-A tenants; and that’s what this deal represents,” he said. “Latin America represents the most profitable region for KFC worldwide; and the Costa Rican franchise has been voted number one in Latin America for the past few years. This simply means we have a great tenant,” he added.