The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The administrator for the BISX-listed Bahamas Property Fund yesterday said a 10 percentage point increase in average occupancy rates would “be the trick” to unlocking long-awaited dividend payments.

Michael Anderson, RoyalFidelity Merchant Bank & Trust’s president, told Tribune Business he “couldn’t remember” when the publicly-listed real estate investment trust (REIT) had last paid dividend returns to shareholders.

With occupancy rates at the Fund’s two flagship properties, the Bahamas Financial Centre and One Marina Drive, standing in the “low 70 per cent” and 60 per cents, respectively, Mr Anderson said he was targeting a 75 per cent average before resuming dividends.

“We obviously still generate reasonable cash and cash flow from the business, but it’s not at a level where we can pay dividends,” he told this newspaper. “We would do so much better if we can get occupancies up.

“We’ve got to get to a higher level of occupancies on a more regular basis to get the cash flow to pay dividends. Hopefully, 2017 will be a better year. We’re better off than we were a couple of years ago, but it’s still not good.”

Mr Anderson then added: “I’m hoping to get occupancies up by 10-15 percentage points. It’s more like 10 per cent growth in overall rentals will be the trick.

“If we end up with a 75 percent average in overall occupancies, that will be a great level to be at. At that average we’ll start to pay, but we’re not there yet. We live in hope.”

The Bahamas Property Fund’s net income for the first nine months of 2016 was down 8.8 per cent year-over-year, standing at $794,192 compared to $871,286 the year before.

Expenses were down by 5.6 per cent or more than $100,000, having fallen from $1.894 million to $1.787 million, largely due to the disappearance of preference share dividends when these were replaced with cheaper bank debt.

However, the Bahamas Property Fund’s revenues fell by more than $200,000 year-over-year to $2.601 million, due to fewer tenants producing smaller income streams.

“It’s still struggling along,” Mr Anderson told Tribune Business of the BISX-listed fund. “We seem to gain tenants and then lose tenants. We have interest, but it’s hard to get them.

“We nearly had one for a significant amount of square footage. We had one signed and then they cancelled the lease, because they couldn’t figure out how to use all the space.

Both the Bahamas Financial Centre and One Marina Drive are targeted at niche segment of the commercial property market, the former concentrating on financial services businesses requiring high-end locations with built-in redundancy, and the latter the only office block on Paradise Island.

“There are not many clients in either niche. We’ve just got to find the right one,” Mr Anderson told Tribune Business. “It’s still slow in terms of commercial space; there are not many new companies coming in or needing the space.”

He suggested that average commercial property occupancy rates were in the mid-70 to low-80 per cents in Nassau, with the Bahamas Financial Centre, in particular, now having to compete with the tendency of financial services firms to seek out homes in western New Providence.

“Town is not the same as it used to be,” Mr Anderson added, “as companies expand and move on. A lot of them have gone out west and built.”

Despite the current under-performing occupancy rates, the RoyalFidelity president said the BISX-listed Fund could seek consolation elsewhere, the preference share refinancing having saved more than $100,000 per annum.

“It’s a well-positioned little fund in terms of acquisitions, and has got enough capital,” Mr Anderson told Tribune Business. “The market has been tough the last couple of years, and hopefully something will come along soon.

“It’s an attractive share price. While we’re not paying a dividend, there’s a lot of value potential if we can just get occupancies increased.”