The 138 Student Living Limited’s (138SL) board of directors will meet next Tuesday to consider recommending certain resolutions for its upcoming annual general meeting (AGM) to facilitate an additional equity investment in the company.

The student housing provider endured two years of virtual schooling as The University of the West Indies (UWI), Mona navigated the varying events surrounding the novel coronavirus pandemic. As a result, its balance sheet shrunk from $11.04 billion in September 2019 to $9.72 billion for September 2022. Its cash and cash equivalent position plus short-term deposits declined from $302.04 million to $170.44 million over the same time frame.

“This is very preliminary, and the notice is more a regulatory one. At this time there is nothing further to disclose/add,” said Chairman Ian Parsard in an e-mail with the Jamaica Observer on Tuesday about the Jamaica Stock Exchange (JSE) disclosure.

The 138SL went public in December 2014 where it raised $331.60 million through the issuance of new ordinary shares and $168.40 million through the issuance of preference shares. As per 138SL 2022 audited financials, only 66 million ordinary shares and 59,971,500 preference shares can be issued before the authorised limit is hit. In order to issue more shares above that authorised limit, 138SL shareholders would have to approve a change to the company’s articles at an AGM or extraordinary general meeting.

The cumulative redeemable preference shares mature in 30 years with the interest rate set at 300 basis points (3.00 per cent) plus the Bank of Jamaica’s 180-day weighted average treasury bill yield (WATBY). The payable relating to the preference share was $38.62 million at the end of the financial year (FY).

The 138SL’s ordinary shares currently trade at $5 per share which isn’t far from its initial public offering price of $4 while its preference shares trade at $68.99 per share, which is well above the issuance price of $5.

The 138SL declared its first ordinary dividend of $0.13 or $53.89 million for shareholders on record as of January 6 who are to be paid on February 23.

The company sent out a recent disclosure stating that its 2022 annual report was delayed and should be filed by February 28. JSE rules state that an AGM can occur 21 days after the annual report is submitted which means the shareholder meeting can possibly be held in mid-March. The last AGM was held in July 2022.

The company and its subsidiary, 138SL Restoration Limited, operate 1,464 rooms across four locations at UWI consisting of 1,692 beds. This is done under a 65-year concession agreement with UWI from November 2014 which also provides the company with a minimum occupancy of 90 per cent. Any variance below the minimum threshold is charged to UWI, Mona.

Based on its concession agreement with UWI, Mona for guaranteed 90 per cent occupancy, consolidated receivables from UWI, Mona shoot up from $272.54 million to $1.31 billion from 2019 to 2021 before it decreased to $860.71 million in 2022. This concession means that if occupancy at the 138SL halls is below 90 per cent, UWI, Mona will pay the difference between 90 per cent and the actual occupancy.

The 138SL’s average occupancy for its fourth quarter (July to September) of its 2022 FY was 90 per cent and expected to be at full capacity for UWI, Mona’s second semester which began last month.

Total consolidated revenue increased by 39 per cent to $1.20 billion with net profit rising by 44 per cent to $318.36 million for the 2022 FY. Earnings per share improved from $0.53 to $0.77 with shareholders equity at $4.56 billion.

The 138SL was able to renegotiate its $4.21 billion long-term notes with series 2A and 2B long maturing in June 2027, series D in May 2028 and series 1 in September 2032. Interest is carried at WATBY plus 350 basis points with one loan at a fixed rate of 8.50 per cent. Its $210 million short term loans from Sagicor Bank Jamaica Limited were extended to June and September 2023.

In October, Parsard said that the company was not interested in the market opportunity for student housing in the United States of America and would share a strategic development plan in due course. A month later, he added that the company was focusing on rebuilding the short-term deposits for debt servicing reserves.