July 16, 2021
Total investment income for the year ended September 30, 2020 surged to total BBD$4.58 million (2019: BBD$6.99 million). Consequently, Eppley Caribbean Property Fund Limited (CPFV) reported net profit for the year of $1.89 million versus a net profit of $3.88 million booked in the previous year. For the six months ended March 2021, total investment income increased to a total of BBD$3.26 million (2020: BBD$2.92 million). As a result, profits attributable to shareholders for the six months amounted to BBD$1.62 million compared to BBD$1.68 million booked prior corresponding period.
CFPV has diversified its portfolio regionally with high quality buildings in the following proportions:
- 105-107 Marcus Garvey Drive: 16%
- 10-14 Broad Street: 15%
- Hastings Business Centre: 13%
- Angels Industrial Estate: 11%
- Empire Shopping Centre: 10%
- Mall Plaza: 7%
- Alamac Warehouse: 5%
- Emerald City Mall: 5%
- 227 Marcus Garvey Drive: 4%
- Sunset Crest Mall: 3%
- 24 Broad Street: 3%
- Carlisle House: 3%
- 52 Valsayn Branch Road: 2%
- Chattel Village: 2%
- 155-157 Tragarete Road: 2%
- 693 Spanish Town Road: 1%
Performance Review
Over the past year, CPFV encountered the following, according to Justin Nam, General Manager of Eppley:
- Most challenging operating environment in a century
- Impacted by rent relief measures, primarily on tourism exposed Barbados properties
- Nevertheless, performance remained resilient and profitable
- Dividend payments and buybacks initiatives maintained
- Very strong performance from Jamaican and industrial assets regionally
- Validated strategy to scale and diversify by geography and by asset type
CPFV has diversified its portfolio from 100% investment in Barbados to 3% in Trinidad and Tobago, 49% in Jamaica and 48% in Barbados since Eppley Management acquired the CPFV. Also, the type of investment moved to 34% in industrial, 29% in office and 42% in retail properties.
The Value Fund has significant liquidity and low leverage to take advantage of new opportunities. Management is open to investments across the entire the English-Speaking Caribbean but currently believes the opportunities in “Jamaica looks strong at the moment and that is where emphasis is.” Management encourages owners of high quality large commercial real estate to reach out to them for a decisive buyer with the ability to move quickly.
Management described its shares as a compelling investment due to the following Eppley Value Fund attributes:
- “Large diversified, high-quality regional portfolio
- Strong resilient cashflows (NOI yield of 8%)
- Commitment to distribute cash via dividend and buyback (6% dividend yield target)
- Potential for improved operating performance as Covid-19 recedes
- Healthy pipeline of acquisition opportunities.”
Regarding the Development Fund, the portfolio is a regional portfolio of development lands and high-quality residential unit. Management noted that, “the pace of asset sales has slowed due to Covid-19 but the goal remains to convert assets to cash.” The regional footprint is spread across Barbados (67%), St. Vincent (17%) and St. Lucia (16%).
The outlook of CPFV is converting assets to cash while reevaluating Fund focus by:
- Close discount to NAV
- Continue to focus on improving operating performance
- Evaluate repurchasing shares on the market if discount to NAV persists
- Build cash from proceeds of asset sales
- Continue to evaluate Fund’s investment mandate
Disclaimer:
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.
