Sunday 23 February, 2020

Eppley reviewing industrial assets for more investment opportunities

Nicholas Scott, Chairman of Eppley Caribbean Property Fund.

Nicholas Scott, Chairman of Eppley Caribbean Property Fund.

Eppley Fund Managers Limited’s (Eppley), which in September concluded its first year of managing Eppley Caribbean Property Fund Limited is reviewing industrial assets for more investment opportunities.

“We believe that industrial assets are often overlooked and misunderstood by investors in the Caribbean and therefore present a good opportunity to acquire assets at attractive prices relative to their cash flows,” the directors outlined in the company's annual report released this week.

They commented: “the cost to build industrial space and in comparable locations far exceeds our purchase price these assets.”

Eppley ended the year with a portfolio of 10 properties.

In 2019, the company’s Value Fund recorded over $2 million of fair value gains on acquisitions at favourable prices and the extension of key long-term leases, the annual report outlined.

Eppley acquired four properties in 2019, adding Jamaican and industrial assets to the portfolio for the first time.

Included is Empire Shopping Centre, a retail and office complex located in the heart of the Cross Roads in Kingston spanning over 37,000 square feet.

The property’s anchor tenant is Sampar’s, a supermarket chain owned and operated by Derrimon Trading, a publicly listed distribution and retailing company.

Other tenants include Island Grill, Sagicor and Access Financial Services.

“Empire Shopping Centre’s access to parking, high traffic and visibility along Half Way Tree Road makes it an especially desirable location for retailers. We believe that building comparable retail space in Cross Roads would cost significantly more than our purchase price, assuming a developer could even find any suitable land in the area,” the report stated.

The directors expect the property to continue to deliver strong operating cash flows and appreciation to the Value Fund for many years to come.

Other properties include Angels Industrial Estate, 227 Marcus Garvey Drive and Alamac Warehouse, a trio of industrial assets in Jamaica and Barbados.

Angels is a 120,000 square foot distribution facility in St Catherine, located close to major transportation links to Kingston, Portmore and the north cost of Jamaica.

Meanwhile, the property on 227 Marcus Garvey Drive is a 27,000 square foot manufacturing and warehouse facility located near the Port of Kingston.

Alamac is a 39,000 square foot distribution facility located in Fontabelle, Barbados located near the Port of Barbados.

Eppley outlined that all three facilities have strong tenants.

The company’s Value Fund ended the year with a cash balance of $38.3 million, reflecting the proceeds of the company’s recent capital raise on the Jamaica Stock Exchange.

Directors commented that the cash and a conservatively leveraged balance sheet gives them the ability to decisively acquire large commercial properties when the right opportunity arises.

In 2019 the Value Fund produced a profit attributable to shareholders of $3.9 million in 2019 or $0.061 per share.

This is compared to a loss attributable to shareholders of $801,000 in 2018.


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