Despite aiming to bring in an initial target of $2.15 billion from its additional public offering (APO), 138 Student Living Limited (138SL) was only able to bring in $510.48 million, just marginally above the $500-million mark for the offer to have been successful as per regulations.

The offer was published on September 1 and opened on September 8 and had an initial closing date of October 6. However, it was extended to October 23 which was the date the offer closed. The company’s quarterly report revealed that 122,355,600 shares were issued which was relative to 513.97 million shares on offer and potential 770.96 million shares had the offer been upsized. Based on the offer price of $4.05 for reserved applicants and $4.40 for the general public, the company would have brought in up to $538.36 million in new capital.

While Cumax Wealth Management Limited, Sagicor Investments Jamaica Limited and JN Fund Managers Limited gave recommendations of overweight, participate and buy, respectively, Proven Wealth Limited and NCB Capital Markets Limited gave do not participate recommendations on the offer based on the offer being below the required investor return and dividend prospect being weak based on historical cashflows.

With only a fraction of the amount it planned to raise, the company will turn its attention to cutting its debt pile which stood at $4.19 billion at the end of September, excluding its redeemable preference shares in issue. $362.63 million in short-term loans from Sagicor Bank Jamaica Limited were due between June to September, but the cashflow statement revealed $338.80 million repaid for the 2023 financial year ended September 30. The quarterly report is unaudited with the audited financial statements due by December 29.

Despite the miss for its APO, 138SL was able to grow its fourth-quarter revenue 11 per cent to $342.89 million which was driven by its 94 per cent occupancy rate, increase in rental rates across all halls and short-term rental revenue. However, a sharp 33 per cent jump in operating expenses decreased operating profit from $169.15 million to $155.56 million. An increase in finance costs and a higher tax expense resulted in the net profit declining 29 per cent to $60.84 million.

For the overall financial year, 138SL’s revenue grew 16 per cent to $1.39 billion which exceeds the 2020 figure of $1.33 billion. 2023 FY occupancy of 81 per cent was just below the 82 per cent figure reported for 2019. Due to the 37 per cent increase in operating expenses to $687.83 million, operating profit growth was flat at $703.17 million. With lower finance costs and taxation charges, net profit grew four per cent to $330.91 million. Earnings per share moved from $0.77 to $0.80. Operational cashflow rose from $505.01 million to $570.19 million.

Total assets grew to $9.88 billion with non-current assets moving to $8.70 billion. Cash and cash equivalents declined from $170.44 million to $55.95 million with receivables rising 22 per cent to $1.10 billion, with UWI Mona making up the bulk of this balance. Total liabilities decreased three per cent to $5.01 billion with shareholders’ equity at $4.87 billion.

138SL’s stock price closed Tuesday at $4.05 which leaves it down 19 per cent year-to-date with a market capitalisation of $2.17 billion which includes the newly issued shares. 138SL paid a $0.13 dividend on February 23.