Eppley Caribbean Property Fund Limited SCC is looking to acquire more properties in its Value Fund (CPFV) portfolio as it seeks to improve its returns from opportunities spread across the English-speaking Caribbean.

This was mentioned at the virtual shareholder meeting on Wednesday with Eppley Limited’s General Manager Justin Nam mentioning that CPFV should be completing a transaction in the coming months from its robust pipeline of opportunities. CPFV is currently in Jamaica, Barbados and Trinidad & Tobago with Jamaica making up 56 per cent of the portfolio and Barbados making up 38 per cent. The portfolio is currently made up of 17 properties totalling 874,946 square feet of industrial, office, retail and business process outsourcing spaces.

“Obviously, further south in Guyana, the fastest-growing economy in the world, we spend a lot of time looking at assets there. We currently do not have assets in the portfolio in Guyana, but I would be surprised if in the long term, Guyana did not also represent a piece of our portfolio. We’re certainly looking at opportunities there all the time,” said Eppley SCC Chairman Nicholas Scott on exploring opportunities in Latin America. Eppley Limited manages Eppley SCC through a subsidiary.

While Scott highlighted that the focus would remain on capitalising on existing opportunities in the English-speaking Caribbean, he highlighted that there would be an increased focus on improving the net operating income (NOI) yield and value from the tenanted properties.

As such, CPFV is completing significant developments on the industrial property on 693 Spanish Town Road in St Andrew with the property being refurbished and leased to a blue-chip tenant who will take up residence by the end of the year. The property remained dormant for several years and was known as the former Coca-Cola bottling plant. CPFV acquired the remaining 50 per cent interest in 693STR Limited in December which gives it 100 per cent interest in the property. This resulted in a BD$455,861 gain on bargain purchase in the first quarter.

The Alamac Warehouse in Fontabelle, Barbados, is also receiving significant upgrades and has signed leases in place to bring it from 62 to 100 per cent occupancy later this year. Although there was no significant announcement surrounding the Carlisle House in Bridgetown which had a 13 per cent occupancy at the end of 2022, Scott mentioned that the use case is likely to change and bring positive upside to the portfolio.

CPFV saw its total investment income for the first six months (October to March) increase 40 per cent to BD$8.15 million as it saw a significant jump in fair value gains which amounted to BD$3.70 million. However, its fund from operations remained flat at BD$2.02 million during the period as higher interest expense brought down the figure.

However, Scott referenced that the triple net leases for the properties can be adjusted in line with inflation which ensures that the fund’s earnings don’t slow down in an inflationary environment. Eppley vice-president of real estate and infrastructure Denise Gallimore also mentioned that there is a plan to transform a roof space at Mall Plaza in St Andrew to improve the NOI of the space. She further highlighted that the addition of ATMs, kiosks and renovations are some ways to improve income and improve the positioning of the properties to tenants. This is in a bid for CPFV to grow its dividend yield to 9.0 per cent of its net asset value (NAV) and 14.3 per cent of its stock price in the future.

CPFV’s net profit grew 54 per cent to BD$6.21 million for the first six months with earnings per share of BD$0.05. Total assets are up six per cent over the same period to BDS$140.26 million with shareholders equity rising to BD$110.05 million. Its NAV was BD$0.81.

CPFV has bought 55 per cent of its targeted 3.8 million units under its share buy-back programme up to July 3. Its share price is down 16 per cent year to date on the Jamaica Stock Exchange to $39.50 as of Thursday. A connected person sold 8,348,055 shares at $42.99 on July 4 to another connected person.

“We’ll never be in a position to tell you what we’re going to buy before we buy it, but as both Justin and Denise have highlighted, we have a robust pipeline that we’re always looking at regionally. Higher interest rates certainly have changed the landscape, but fortunately, the cap rates we see have also adjusted and we continue to see compelling opportunities. I think you can expect to see us to continue to execute on our investment strategy and buy buildings that are not dissimilar from those that exist in our portfolio today,” Scott closed.