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Eppley Caribbean Property Fund share buy-back misses mark

In a Caribbean Business Report follow-up, Eppley Caribbean Property Fund is reporting that it missed its mark to acquire the targeted 300,000 shares in its buy-back plan.

Eppley Caribbean Property Fund Chairman Nicholas A Scott

The company reports that it only managed to acquire just over 14,000 shares in its buy-back plan, which was initiated because the shares are currently being traded below its book value. Eppley, which is the largest listed real estate mutual fund in the Caribbean, bought 14,645 shares during the period February 4-5, 2020.

The shares were repurchased on the open market via the company’s broker, NCB Capital Markets Limited. In a posting to the Jamaica Stock Exchange, where Eppley shares are traded, the company disclosed that the source of funds used for purchasing the 14,645 shares was cash from its operations.

Eppley trades on the Jamaica, Barbados and Trinidad and Tobago stock exchanges

Eppley trades on the Jamaica, Barbados and Trinidad and Tobago stock exchanges. According to the company, “the purpose for the buy-back purchase was to unlock shareholder value by purchasing at a price that is at a significant discount to our book value per share consistent with the strategy previously disclosed in our prospectus and our recently released Annual Report.”

The company had earlier indicated that it is seeking to repurchase shares overtime with its own cash “at a price below or equal to the company’s Net Asset Value per Share” or J$48.64 per share as of September 30, 2019. Eppley was listed in 2013 with an investment strategy of producing attractive risk-adjusted returns by identifying inefficiencies in Caribbean financial markets.

The Hastings Business Centre in Barbados which is owned by Eppley.
(Photo: Eppley Caribbean Property Fund)

Eppley 2019 financial results

Eppley just released its 2019 financial results showing record earnings of $157.7 million for the year, a 20 per cent return on the company’s opening equity. The company has declared the largest dividend in its history of $0.57 per share.

At the end of the quarter, Eppley owned a $3.8-billion investment portfolio consisting of loans, leases, receivables, and investments in real estate and asset management joint ventures and subsidiaries, according to the quarterly report. The average income yield of its portfolio was 13 per cent, and its capital-at-risk was less than one per cent of capital.

The $157.7 million after-tax profit was significantly above the $120.5 million the company earned in 2018. The net interest income on its proprietary investments and the management fees from its funds both increased significantly, highlighting the continued improvement in the quality of the company’s underlying business.

Additionally, Eppley earned $13.8 million of other comprehensive income last year, not included in the $157.7 million figure, mostly reflecting increases in the fair value of its investments.

Eppley was listed in 2013 with an investment strategy of producing attractive risk-adjusted returns by identifying inefficiencies in Caribbean financial markets. The company now owns one of the largest and highest-quality commercial real estate portfolios in the region, totalling over 500,000 square feet.

It also owns properties in Barbados and Jamaica, including the Cave Shepherd Building, 24 Broad Street, Emerald City Mall, Alamac Warehouse, Sunset Mall, Chattel Village, Carlisle House and Hastings Office Centre in Barbados.

In Jamaica the company owns the Empire Shopping Centre, Angels Industrial Estate and 227 Marcus Garvey Drive in Jamaica. A total of 64 per cent of the fund’s portfolio is in Barbados and 36 per cent in Jamaica. Categorised by type of business, 30 per cent of the properties are industrial, nine per cent office and 61 per cent retail.