First Rock Real Estate secures third KFC development in Costa Rica
FirstRock Real Estate Investments Limited, through its subsidiary FirstRock Latam, has secured another agreement with global fast-food chain KFC to undertake two major commercial developments in Costa Rica.
The upcoming project, located in Coyol, Alajuela, will involve the construction and leasing of both a restaurant and warehouse that will serve as an essential storage and distribution hub for the KFC franchise in the country.
In 2023, FirstRock also acquired two parcels of land in Alajuela, San José, to build two KFC restaurants. The first, El Robe, was completed in less than three months and became the 55th KFC location in Costa Rica.
The new deal marks a key milestone for FirstRock Real Estate as it continues to expand its presence and portfolio in Latin America. The 20-year lease arrangements with KFC for the restaurant and distribution centre will provide KFC with a secure, long-term space to grow its operations in Costa Rica while allowing FirstRock Latam to capitalise on the continued growth of the fast-food sector in the region.
For this project FirstRock Latam has again partnered with BAC Credomatic, which is providing significant funding for the developments, covering 50 per cent of land acquisition costs and 95 per cent of construction costs. The partnership highlights the financier’s confidence in the projects’ success and the growth of both KFC and FirstRock Latam in Costa Rica.
With Latin America being the most profitable region for KFC worldwide, and Costa Rica’s franchise consistently ranking number one in the region in recent years, FirstRock aims to leverage these opportunities in the commercial tenant market. The company is also shifting its focus away from real estate development towards building out a Real Estate Investment Trust (REIT).
“The significance of these developments were emphasised to us by KFC from the onset of the negotiations. Coyol is the largest and fastest-growing industrial region in the country, and with that comes a large customer base for the company’s food, and more importantly, access to large logistics and distribution channels,” said Shaun Myers, director of First Rock Latam.
“We are thrilled to continue building on our strong relationship with KFC and further strengthen our presence in Central America,” he added.
Myers, having recently transitioned fully into the role of international business development, expressed optimism in the company’s renewed strategy to invest in high-yielding real estate assets across the region, a shift which he believes will help to generate immediate to short-term cash flows from rental income.
“Following on from the recent development and lease of our initial two KFC restaurants in Costa Rica and the acquisition of a majority stake in the Crown Square commercial complex in Grand Cayman, this acquisition is expected to contribute positively to the bottom line and return the company to profitability in the short term,” he said, noting that, like the first two developments, this project is expected to be completed in approximately three to four months. Once completed, the properties are also expected to provide the company with strong cash flows.
As the company continued to battle headwinds, for the 12 months ended December 31, 2024, the group reported a total comprehensive loss attributable to shareholders of US$8.9 million, more than two times that of the prior year. The year’s performance, the directors said, was primarily impacted by unrealised fair value losses on financial instruments, foreign exchange losses as well as some losses from the disposal of investment properties driven by downward movement in property valuations.
“Despite these short-term financial impacts, the company remains firmly on course with its strategic realignment towards becoming a full-fledged REIT. During the year, the group took decisive steps to optimise its asset portfolio by divesting non-income-generating properties while acquiring premium, income-producing commercial assets across the Caribbean. The thrust to acquire income-generating properties outside of Jamaica has begun in earnest,” Chairman Norman Reid told shareholders in the recently published year-end report.
As FirstRock Real Estate continues to expand its portfolio in Latin America, the developments in Costa Rica signal an exciting new chapter in the company’s growth. Looking ahead, the company is poised to pursue further ventures in the region.
“The KFC project is expected to generate both economic and job growth in the region, providing employment opportunities during the construction phase and creating long-term jobs once the restaurant and warehouse are operational,” the company stated in a news release.
From left: Daniela Mendez, attorney, Invicta Legal; Betsabe Beraja, real estate consultant; Leslie Saborio, partner at ITFCR; Adrian Araya, development director at KFC; Shaun Myers, executive director, FirstRock Latam; Christian von Breymann, partner at ITFCR; and Miguel Alcala, director at KFC, share in a photo opportunity following the recent signing of a development agreement.
