WITH under a week left to the closure of its additional public offering (APO), other brokers have published their analysis on Kingston Properties Limited (KPREIT).

KPREIT’s APO closes on May 10 with the company seeking to raise $1.5 billion through the issuance of 200 million shares, with an option to upsize to 300 million shares and raise $2.25 billion. KPREIT’s APO is priced at $7.50 per share with no reserved pools and is aimed at paying down a $700-million bridge loan; complete its US$16.1 million developments in Jamaica and The Cayman Islands; provide capital to take advantage of opportunities as they arise; and expand the company’s shareholder base.

NCB Capital Markets Limited (NCBCM) has recommended that its clients participate in the offer based on the fact that it is fairly valued since it is being offered at the company’s book value or net asset value (NAV) of $7.50 (US$0.04816). It also noted KPREIT’s geographic diversification and number of real estate holdings as a plus despite having a return on equity of 10.1 per cent compared to Stanley Motta Limited of 17.7 per cent. This was stated as a benefit since it somewhat insulates the company against a downturn in any one sector.

“Given that the additional shares are being issued at NAV, its relatively good financial metrics when compared to its peers, future plans for property development, and the fact that real estate assets have proven to be a natural hedge against inflation and tend to outperform during high inflationary periods, we are recommending that clients participate in KPREIT’s APO,” the NCBCM report stated.

Proven Wealth Limited (PWL) has also given the APO a thumbs up with a target price of $8.38, which translates to a 14.6 per cent return when accounting for the 2.8 per cent dividend yield. It listed the track record, the diversification of the portfolio, strengthening of the balance sheet and aggressive dividend yield as investment positives. PWL listed insurance risk, re-letting and tenant risk, illiquidity risk and the currency exchange risk as investment risks for the company.

“The APO gives investors an opportunity to utilise local currency to earn in USD through KPREIT’s dividends, which, given the company’s revised dividend policy of up to 90 per cent of funds from operations and favourable prospects for earnings in the medium term, should provide investors with steady and improving cash flows. Based on the foregoing, we recommend that investors participate in the offer. We view this as being suited for investors with an above-average risk tolerance and a long-term investment horizon,” the PWL report stated.

Sagicor Investments Jamaica Limited (SILJ) gave a target price of $8.50 for the offer and also recommended investors participate. It listed the strong regional strategy to mitigate against geographic risk, the steady increase in demand for warehouses and mixed-use properties along with the payment of USD dividends which acts as a hedge against the Jamaican dollar. However, the exposure to natural disaster, illiquidity in the company’s shares and the pandemic risk were listed as investment negatives. SILJ is a selling agent to the offer.

“KPREIT remained resilient throughout the pandemic with continued improvement in operating profits. Higher global vaccination rates have increased global travel and reopening of offices. As countries shift policy from pandemic to endemic, KPREIT is uniquely positioned to take advantage of the opportunities arising from the pandemic. The rise in e-commerce has seen increased demand for logistics and data centres, warehousing, and self-storage units. This should positively impact KPREIT’s rental income,” the SILJ report noted.

KPREIT’s stock price increased by 17 per cent on Friday to $8.86 with the company’s market capitalisation standing at $6 billion. The stock remains down two per cent year to date.