CPFV reports 7% decrease in nine months net profit

August 18, 2020

Eppley Caribbean Property Fund Limited (CPFV), for the nine months ended June 30, 2020 reported net rental income of $2.15 million (2019: $1.10 million), a 96% increase year over year. In addition, share of profit of investments accounted for using the equity method decreased from $1.60 million in 2019 to $1.17 million for the nine months ended June 2020.

Fair value losses on investment property amounted to $220,477 relative to a gain of $40,000 in 2019.

Interest income amounted to $582,716 versus $92,713 booked for the corresponding nine months last year. Other income of $423 was reported for the nine months ended June 2020 (2019: $90,074).

As such, total investment income increased to a total of $3.69 million (2019: $2.92 million). For the third quarter ended June 30, 2020, total investment income amounted to $766,446 (2019: $1.02 million).

Total operating expenses amounted to $1.92 million (2019: $1.03 million). Total operating expenses can be broken down as follows:

Interest expenses totalled $367,701 (2019: $399,735).

Fund management fees was $490,962 compared to $224,335 booked for 2019 nine months.

Professional fees totalled $256,409 (2019: $133,124).

Directors and subcommittee fees closed at $2,400 (2019: $1,920).

Office and administrative fees went up to $25,730 (2019: $31,416).

Impairment charge closed the nine months at $24,221 relative to an impairment recovery of $11,087 in 2019.

Investment advisor fees totalled $490,962 (2019: $224,335).

Total operating expense for the third quarter ended June 30, 2020 amounted to $682,337 (2019: $375,145).

Profit before tax for the nine months ended June 30, 2020 closed at $1.76 million (2019: $1.89 million). Whereas, profit before tax for the third quarter ended June 30, 2020 totalled $84,109 (2019: $641,755).

Profits attributable to Cellular property fund shareholders for the nine months amounted to $1.77 million compared to $1.86 million booked prior corresponding period. While, profit attributable to Cellular property fund shareholders for the third quarter ended June 30, 2020 totalled $84,009 (2019: $642,927).

Consequently, total comprehensive income for the period closed at $1.90 million compared to $1.89 million reported for 2019’s corresponding period. Total comprehensive income for the third quarter ended June 30, 2020 totalled $220,763 (2019: $641,755).

Earnings per share for the nine months ended June 30, 2020 totalled 1.445 cents compared to EPS of 1.521 cents for the corresponding period in 2019. The third quarter’s EPS amounted to 0.069 cent (2019: 0.526 cent). Trailing EPS amounted to 3.076 cents. The total amount of shares outstanding used for this calculation was 122,181,628 units. CPFV closed the trading period at JMD $48.59 on August 18, 2020.

The Company stated, “These results reflect the impact of COVID 19 on the Fund’s operations during the most recent quarter. As indicated in our previous letter, the Fund agreed to provide temporary rent relief to certain retail tenants in Barbados. Whilst these agreements will impact our FFO and earnings in the short-term, in most cases the affected leases have been extended on favorable terms designed to offset the impact to the Fund over the long-term.”

CPFV noted, “Our strategy has been validated by recent developments as the Fund’s newly acquired industrial and office assets have proven particularly resilient in the face of COVID 19. We also ended the quarter with over $28 million of cash. As this crisis continues to develop, new opportunities will emerge to purchase high quality commercial real estate on improved terms. These transactions will favour large, sophisticated buyers that can act decisively without the need for external funding. We already have a healthy pipeline and expect to begin completing new acquisitions in the coming months. These new purchases will continue the Fund’s strategy and take advantage of opportunities to buy assets at depressed market prices.”

Balance Sheet Highlights:

As at June 30, 2020, total assets amounted to $99.05 million, 65% more than prior corresponding period’s $59.96 million in 2019. This was attributed to a rise in ‘Investment properties’ which closed the period at $48.06 million (2019: $26.82 million). Additionally, the growth in ‘Cash and Cash Equivalents’ contributed to the overall increase in the company’s assets, closing at $28.60 million (2019: $12.35 million).

CPFV, as at June 30, 2020, booked total shareholders’ funds of $86.71 million (2019: $40.26 million), which translated into a net asset value per share of $0.72 (2019: $0.33).

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