Eppley Caribbean Property Fund Limited SCC – Value Fund (CPFV) has managed to grow its real estate portfolio from 269,848 square feet (sq ft) in June 2019 to 1.14 million sq ft as of September 2023 with the business continuing to expand to new jurisdictions.

CPFV, which was an all-Barbadian real estate-focused fund prior to listing on the Jamaica Stock Exchange (JSE), has since expanded its portfolio to Jamaica and Trinidad & Tobago with each Caribbean territory making up 73 per cent and three per cent, respectively of all the properties owned. The company was able to grow its asset base from BDS$55.63 million ($3.73 billion) with six properties in September to BDS$157.91 million ($12.18 billion) across 39 properties over that same period.

Although it only raised $3.07 billion or 68 per cent of its original target in its July 2019 JSE offering, the company has been able to grow shareholders equity from BDS$88.09 million in September 2019 to BDS$119.82 million in September 2023. This has also translated into the net asset value (NAV), a metric to reflect shareholders’ equity divided by outstanding shares, increasing from BDS$0.72 to BDS$0.88.

“The Value Fund’s investment strategy is aimed at scaling and diversifying our portfolio of regional, high-quality, income-producing commercial real estate. During the year, the Value Fund completed a major transaction by acquiring a real estate portfolio from JN Bank Limited in a sale and leaseback transaction. The portfolio consists of 22 commercial offices and branches across Jamaica. The transaction demonstrates that the Value Fund is a trusted partner for owners of commercial real estate in the region seeking to complete large transactions,” said the company’s 2023 annual report.

While the Value Fund benefited from a tremendous increase in BDS$13.44 million in fair value gains, net rental income was down six per cent to BDS$4.33 million due to vacancies at two Barbadian properties during the year. Overall, total investment income was up 62 per cent to BDS$21.54 million with profit before tax increasing 79 per cent to BDS$17.71 million. Net profit jumped 84 per cent to BDS$17.48 million with earnings per share at BDS$0.13.

CPFV acquired the remaining 50 per cent interest of its joint venture 693STR Limited in December 2022 for BDS$4.93 million (US$2.47 million). The 75,000 sq ft property underwent BDS$1.29 million in renovations during the year for a new blue-chip tenant who was set to take up residence at the end of 2023. As a result, this property was recorded as empty by September 30, CPFV’s financial (2023) year end.

CPFV teamed up with Caribbean Mezzanine Fund II to form a joint venture called ECPF Property Holdings (Jamaica) Limited to purchase the JN Bank properties which were worth BDS$59 million ($4.60 billion) covering 266,723 sq ft. This joint venture received BDS$5.16 million (US$2.08 million) from each company for a total of BDS$10.32 million in share capital and a $3.67 billion (BD$47.58 million) mortgage from JN Bank to complete the acquisition. The joint venture didn’t contribute to the company’s income statement as the deal closed on September 29, but the report revealed that the normalised net operating income (NOI) yield for the JN portfolio was 10.2 per cent.

The company was able to have the Alamac Warehouse in Barbados fully tenanted by the end of the year, while the Hastings Business Centre’s occupancy was down by a quarter to 75 per cent. CPFV’s average occupancy at the end of September was 94 per cent with only three properties below 97 per cent occupancy. These properties had an average yield of 7.5 per cent.

Although the annual report didn’t delve into potential new markets, the audited financials revealed that ECPF Property Holdings (St Vincent) Limited was acquired during the fourth quarter. The company, which is based in St Vincent and the Grenadines, was incorporated on September 5 with registration number 27007.

It was also revealed that ECPF acquired ECPF Industrial Property Holdings Limited in October. This company was formed on October 12 in Trinidad and Tobago with its head office at 155 Tragarete Road, a property already owned by CPFV’s subsidiary ECPF Property Holdings (Trinidad) Limited.

CPFV’s stock price closed at $38 (BDS$0.41; TT$1.60) on the respective regional stock exchanges on Monday. Shareholders on record as of January 12 are set to receive a BDS$0.0227 dividend on March 22 which totals BDS$3.07 million. This would bring CPFV’s annualised dividend to BDS$0.0272 ($2.1104) and result in a dividend yield of 5.55 per cent, just below the future target of 14.3 per cent.

CPFV’s share buyback was last executed on October 2 with the fund repurchasing 2,111,501 shares out of its 3.80 million shares target.

CPFV’s first quarter report is due by February 14 with its annual shareholders’ meeting to be held later in the year.

“The Fund Managers [Eppley Fund Managers Limited] are actively engaged with investors to fund a pipeline of regional opportunities with the aim of expanding the portfolio and further improving the performance of the Value Fund. The Value Fund is also focused on identifying opportunities to increase NOI from our existing portfolio. The fund will continue to work closely with its partners to optimise the use case and tenant mix for its portfolio,” the annual report concluded.