The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The BISX-listed Bahamas Property Fund is aiming to slash vacant space at its flagship Bahamas Financial Centre to 20 per cent by year-end, as it hopes to seal a deal that will offset the September loss of its FINCO branch.

Michael Anderson, the fund’s administrator, told Tribune Business that it was in negotiations with a client wanting to lease 7,000 square feet of space at the downtown Nassau property - the same amount of space that will be vacated by FINCO.

Speaking after the Property Fund unveiled a 16.7 per cent income rise to $668,850 for the half-year to end June 30, Mr Anderson said it was now “on the right trajectory” - before getting bad news from Royal Bank at the weekend - and seeing “upside” for the first time in several years.

“We’ve got a number of people showing interest, even more so than before,” he said of the Charlotte Street-based Financial Centre. “We’ve got a large client negotiating with us for a large block of space that will potentially offset the loss of lease revenue from FINCO’s space.

“We’ve also got a number of small clients, small banks setting up, looking at 1,500-2,000 square feet. In the last two months, we’ve got 3,500 square feet leased. There’s a lot more activity in the market for rental space, particularly at the Financial Centre.”

Mr Anderson said financial institutions, in particular, were attracted by the redundancy and extra generators at the Financial Centre, together with its central location and elevators.

He added that recent leases had reduced vacant space at the property to 24,000-25,000 square feet out of a total 100,000.

“It was up to about 30,000 square feet vacant,” Mr Anderson told Tribune Business, “and we got it back to around 25,000 square feet.

“FINCO’s loss would take it to around 32,000 square feet, but we are seeing a lot of activity from people looking to rent space, so we will probably be down to 20,000 square feet vacant by year-end.

“It’s a much-improved situation over the last three-four years, when we slowly started losing tenants. It’s an upside; we’re not losing space.”

Of the Property Fund’s other two buildings, Providence House remains 100 per cent leased due to it being occupied by the PricewaterhouseCoopers (PwC) accounting firm.

Meanwhile, the Paradise Island-based One Marina Drive has also received interest from potential tenants, though not to the same extent as the Bahamas Financial Centre (see story on Page 1).

Mr Anderson said of One Marina Drive:”It’s a niche player for people looking at Paradise Island, and as things pick up from a tourism perspective, we will start to see further interest.”

For the 2014 half-year, the Property Fund’s rental revenues were up year-over-year by 3.7 per cent at $2.009 million, compared to $1.937 million for the year before period. Total revenues were ahead by a similar 3.8 per cent percentage at $2.018 million.

Total operating expenses, meanwhile, were down 1.6 per cent at $1.301 million, largely due to a $35,000 drop in interest payments as the Property Fund’s loan principal is paid down.

The result of all this was that funds from operations rose by 15.3 per cent to $716,843, compared to $621,507 for the 2013 half-year,

Mr Anderson said a reduction in vacant space at the Property Fund’s two flagship properties would further lower costs and boost the bottom line, as its share of Common Area Maintenance (CAM) payments would fall.

He added that the BISX-listed fund would also refinance its existing $3.5 million preference share debt when it matures in 2015, taking advantage of existing market conditions to do so at lower interest rate costs.

“All things seem to be lining up a lot better,” Mr Anderson told Tribune Business, prior to Royal Bank’s decision to close its branch at One Marina Drive. “The Property Fund is on the right trajectory in terms of revenues, and we’re more comfortable going forward with what the likely occupancies will be.’

He added that the Property Fund was aware of one potential acquisition opportunity coming to market, but had made no decision about whether to bid on the building.