Eppley reviews assets, to buy back shares
Published:Friday | January 3, 2020 | 12:16 AMKarena Bennett - Staff Reporter
Eppley Caribbean Property Fund Limited SSC – Value Fund (CPFV), a publicly listed fund in Barbados and Jamaica, has announced its intention to buys back its shares from the market.
In June, CPFV invited the public to acquire up to 97,448,157 shares in the company. The offer, which was priced at J$46.18 per share, was aimed at raising $4.5 billion for the company to purchase a portfolio of commercial properties in Jamaica and Barbados, repay debt, and fund the company’s pipeline of future purchases of commercial properties across the Caribbean.
The number of existing value fund shares as at the date of Eppley’s prospectus was 55,652,768.
Shares of the value fund traded at $48.13 at the start of September but since then have been fluctuating. On Monday, CPFV traded 25,445 shares at $37.72, up $5.72 from the $32.00 it traded on Friday, December 27.
“The directors believe that the company’s shares are currently trading at a significant discount to the company’s fair value, for which its net asset value per share is a proxy. The directors, therefore, believe that repurchasing shares would unlock significant value for the company’s shareholders,” the company said in a notice on the Jamaica Stock Exchange on Tuesday.
“Accordingly, we hereby give notice of our intention to purchase shares on the open market from time to time, using the company’s cash at a price below or equal to the company’s net asset value per share (J$48.64 per share as of September 30, 2019),” it continued.
CPFV, which is made up of a value fund portfolio and development fund properties, raked in losses of $801,000 in 2018 for its value fund. The company, however, managed to produce roughly $3.9 million in profit attributable to shareholders from it value fund, or $0.061 per share, for the financial year ended September 30, 2019.
But aside from taking steps to “erode the difference” between the fund’s share price and its net asset value per share, which stood at $0.72 per share at the end of 2019, Eppley is actively exploring transactions to diversify the fund.
“Our focus is on income-producing real estate assets in the English-speaking Caribbean valued between US$10 million to US$20 million. We also have a strong pipeline of additional acquisition opportunities. When these opportunities materialise, they will allow the value fund to fully deploy its remaining liquidity at returns consistent with our existing portfolio,” Chairman of the company, Nicholas Scott, said in an adjoining note in the company’s just-released annual report.
Eppley’s value fund had a cash balance of $38.3 million at the end of the year, reflecting the proceeds of the recent capital raise.
Subsequent to its financial year end, CPFV completed the purchase of the Hastings Business Centre in Barbados.
The 10 properties the value fund owned at the end of the year had an average yield of 8.2 per cent on an annualised basis.
Nevertheless, Scott has his eyes focused on industrial assets, which he says “are often overlooked and misunderstood by investors in the Caribbean” and hopes to restructure the Carlisle House in Bridgetown, Barbados which stands out as the portfolio’s only underperforming asset.
“We remain focused on addressing Carlisle House and deploying our remaining cash by acquiring commercial real estate assets that meet our criteria. Given increasing vacancies, it will pose a challenge to cover building costs solely from rental income. We continue to actively evaluate options to reposition Carlisle House and are keeping all options on the table,” he said.