Investment company, Eppley, intends to make further investments in industrial real estate in the near future. Managing Director, Nicholas Scott, told Kalilah Reynolds on Taking Stock that the company has been particularly excited about this market, and will be looking to increase the properties under its portfolio.

Eppley also owns commercial and retail properties through its property fund; however, Scott said focus will be placed on warehouses and distribution centres which are becoming increasingly popular for companies looking to take advantage of the growing logistics sector.

 “We think they are an attractive subtype and they are remarkably resilient from a cash flow perspective,” said Scott.

Eppley Managing Director, Nicholas Scott.

“We believe the right way to make money over time is to take advantage of areas where there’s a higher reward,” he added. 

Scott said the company has been eying industrial properties as they continue to be critical to supply chain operations. He also noted that there are gains to be made especially as the logistics sector has not felt a huge impact from the pandemic. 

“They really haven’t skipped a beat…so we really like that sub asset class, we have some assets there in our property fund and we’re going to look for new opportunities in that space,” he said. 

Funds being raised from Eppley’s current preference share offer are expected to help drive the overall infrastructure investments being eyed by Eppley. Scott said the company intends to use the proceeds to continue funding its business and refinance some of the existing preference shares. He says the capital will be used to help grow Eppley’s proprietary portfolio as well as invest in credit, mezzanine and real estate.

“We have one of the strongest opportunity pipelines that we’ve ever seen,” he added while noting that the company also intends to rebalance its portfolio with a shift towards Jamaica to better take advantage of local opportunities. 

Scott said the company decided to return to the market with its preference shares offer to also benefit from the favourable interest rate environment.

He said while the company does have adequate funds to pay off existing preference shares that are about to expire, they are refinancing them to continue generating returns and shares for loyal shareholders.

As opposed to ordinary shares, holders of preference shares are contractually guaranteed a regular dividend even if the company does not make a profit. They are also not at the discretion of boards as is the case with ordinary shares.

As for Eppley’s current offer, Scott said those who lend their money for a longer period can expect matching rewards. Eppley is seeking to raise J$1.2 billion dollars from the offer. Investors who lend their money for two years under the Class A component of the offer will receive a 5% dividend. Those who lend for five years under Class B will get dividends at 7.25% while those lending for the maximum 7 years will be entitled to dividend payouts at 7.75%.

“This is very compelling relative to corporate rates, savings rates and even to recent preference shares so we’re happy to give back a little something to existing and new investors,” said Scott.

The shares are selling for J$20.00 each and investors have to buy at least two hundred shares, or J$4,000.00 worth, in order to participate. 

“The shares are also listed so if you don’t want to wait you can always sell your shares. You do have that liquidity should you need it and should the need arise and that’s another important thing to consider,” he added. 

Investors to the preference shares are also entitled to their full investment at the end of the tenures. The offer which opened on July 12, is scheduled to close on July 26.

Meanwhile, Scott said, as with other shares there could be volatility or issues in the underlying portfolio. However he said shareholders should not be too concerned as the preference shares have the most senior claim on the business, with only the impairment of all ordinary shares the only way there could be a challenge to investors not getting their money back.

In 2020, Eppley recorded a 38% increase in net profits. The company has seen increased profits at a compounded rate of some 40% since becoming a listed company back in 2013.

In 2018, the company graduated from the Junior Market to the Main Market of the Jamaica Stock Exchange (JSE). 

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