Friday 25 September, 2020

Eppley Caribbean Property Fund to buy back shares

Nicholas Scott, Chairman, Eppley Caribbean Property Fund.

Nicholas Scott, Chairman, Eppley Caribbean Property Fund.

Eppley Caribbean Property Fund Limited SCC (CPFV) has advised that in accordance with the company’s existing share buyback policy, notification is being made of CPFV’s intention to repurchase the company’s shares. 

In the Jamaica Stock Exchange notice on Tuesday, December 31, the company said, “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.”

Eppley gave notice of the intention to purchase shares on the open market from time to time using the company’s cash at a price below or equal to its net asset value per Share (J$48.64 per share as of September 30, 2019).

“In accordance with the rules of the Jamaica Stock Exchange regarding share repurchases, any purchases will take place following the expiration of 21 days from this notification and we will immediately provide you with the details of any purchases,” it was stated in the JSE notice.

Directors of Eppley Caribbean Property Fund Limited indicated in the company’s annual report, released at December month-end that the company was considering repurchasing shares in its property company which are currently trading at a discount of around 22 per cent.

In relation to property performance, it was noted that there were big improvements in NOI (net operating income is cash flow generated after operating expenses), FFO (funds from operations) and other measures of profitability.

The company also said it purchased new properties at capitalization rates in line or better than its existing portfolio.

The result was that the 10 properties the Value Fund owned at the end of the year had an average NOI yield of 8.2 per cent on an annualized basis.

The net asset value of the Value Fund was $0.72 per share at the end of 2019.

The directors said the current share price affords investors the opportunity to purchase these assets at a 22 per cent discount to the appraised value.

The company in its report explained, “investors can purchase a liquid share in a portfolio of 10 high quality, tenanted commercial buildings with a six per cent FFO yield net of fees and taxes at a 22 per cent discount to its independently appraised value.”

They concluded, “at current prices, investors can earn an effective FFO yield of eight per cent net of fees and taxes without any benefits from the reinvestment of the Value Fund’s large cash balances, operating improvements at Carlisle House and the recovery of the Barbados economy all providing additional upside.”

In 2019, the Value Fund’s NOI attributable to shareholders increased by over 41 per cent to $3.5 million resulting from an increased stake in the Cave Shepherd building and realizing a full year’s income from its acquisition of Emerald City Mall in 2018 and its recent acquisition of assets in Jamaica and Barbados.

In June the company, managed by Eppley Fund Managers, raised $4.5 billion of fresh capital through an initial offer of shares and cross-listing on the Jamaica Stock Exchange, JSE.  The fund already trades on the Barbados Stock Exchange in its home market. The offer which closed in July was for f 97.45 million shares at $46.18 per share.

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