The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas Property Fund is targeting a 10 percentage point increase in occupancy rates at its flagship downtown Nassau building to 80 per cent by year-end, having successfully leased “a couple thousand square feet” for 2013 to-date.

The BISX-listed real estate investment trust’s (REIT) administrator yesterday told Tribune Business that the Charlotte Street-based Bahamas Financial Centre had managed to attract two new tenants, and was hoping another potential client would make a decision by end-May.

Michael Anderson, who is also RoyalFidelity Merchant Bank & Trust’s president, said that despite the anticipated improvement at the Fund’s main property, no such upward trend was expected at its One Marina Drive asset due to the building’s niche appeal.

Still, Mr Anderson said the Fund was projected to enter 2014 “in a better position”, adding that the Bahamian commercial real estate market had “come off the bottom”.

But, due to an excessive supply of vacant space, landlords such as the Bahamas Property Fund are still finding it difficult to both attract new tenants and obtain the rental rates they want.

Disclosing that vacancy rates were running at 28 per cent for the 100,000 square foot Bahamas Financial Centre, and 20 per cent at One Marina Drive, Mr Anderson said the Fund was starting to see recovery “glimmers”.

“Occupancy rates have remained largely where they were, but we’re starting to see a recovery in rentals at the Bahamas Financial Centre,” he told Tribune Business.

“We’ve had a couple of new tenants come in for small amounts of space, and one tenant increased the area they’re renting.

“Between the three of them it’s 2,000 square feet or so, just a couple of thousand square feet, but it’s a positive development,” Mr Anderson added.

“We haven’t seen much in new tenants for a while, a few years. I’m not sure when the last tenant was - maybe a couple of years ago.”

Hinting that better days may be ahead for the Bahamas Property Fund and its Bahamian shareholders, Mr Anderson said of the Bahamas Financial Centre: “We’re waiting for one potential tenant to confirm whether they’re going to come, and we expect that in the next few weeks, hopefully before the end of June.

“I’m hoping that we finish the year closer to 80 per cent occupancy than the 70 per cent we started with. I’d like to think we’ll be solidifying that through the rest of the year, and will enter 2014 in a better position.”

Expectations are not as high for One Marina Drive. “I don’t expect any significant change at One Marina Drive,” Mr Anderson told Tribune Business.

“It’s dependent on people being on Paradise Island. We do have vacant space that we want to lease, but we’re appealing to the part of the market that needs to be on Paradise Island.”

The Bahamas Property Fund’s third building, Providence House, home to the PricewaterhouseCoopers (PwC) accounting firm, remains fully leased.

“I think the market is turning,” Mr Anderson said. “It’s not fast by any means, but it’s coming off the bottom and we can see glimmers in one or two areas.

“Once people get more confident that the recovery will be sustained, and plan for the long-term, we’ll start to see the benefits of that.

“There’s still a lot of vacant office space and landlords trying to find tenants, but it’s difficult to get growth with tenants able to go around town and see what’s available, because it’s a buyer’s market.”

While improvement was anticipated at the Bahamas Property Fund’s existing properties, it remains on the hunt for the right acquisitions.

“We are not formally looking at any, but we are exploring one acquisition,” Mr Anderson added. “It’s too early to go into any details.”

He said the Fund was well-positioned to close on such deals, with high levels of capital and low amounts of debt on the balance sheet.

“There’s opportunity to take on more leverage for acquisitions, so the Fund is very strong financially,” Mr Anderson said.

The Bahamas Property Fund’s 2013 first quarter results were essentially flat year-over-year, with net income standing at $306,226 compared to $299,237.

A 7.5 per cent drop in top-line revenues, from $1.051 million to $973,207, was offset by a 14.7 per cent decline in ‘other expenses’ to $393,948 from $462,079.