Indications that subscriptions going slower than expected
Real estate investment company, Kingston Properties Limited, which trades under the name, KPREIT, has extended its additional public offer (APO) of shares by an additional month.
The APO, which was opened on April 19 and scheduled to close on May 10, has been extended to June 10, which will be the new closing date.
Indications are that subscription to the APO, which is seeking to raise J$1.5 billion, has been going slower than expected, leading to the move to extend the closing date and allowing investors more time to gather capital to subscribe to the offer for 200 million ordinary shares, which are being sold at $7.50 per share.
In spite of the slow take-up, the APO could still reach the J$1.5 billion and 200-million shares subscription target, given that a sizable portion of 66 million shares worth J$500 million have been reserved for VM Wealth Management, the lead broker and underwriter of the APO.
Brokerage houses give the APO a buy assessment
Depending on demand, KPREIT may upsize the offer to J$2.25 billion. Brokerage houses have given the APO a buy in their market analysis.
Barita Investments estimated the share value yielding an average of J$8.39 with a valuation range of $7.54 to $9.24, implying a capital appreciation of 11.81 per cent over the offer price of $7.50. It says this investment is best suited for investors looking for consistent and increasing dividend payouts along with the potential for capital appreciation over a long-term horizon.
Barita cited that KPREIT’s gross dividend payouts have cumulatively increased by 423.26 per cent over the last eight years (2014 to 2021). Most of the proceeds from the APO have been earmarked for the development of properties currently owned by KPREIT and new acquisitions.
The real estate investment trust company has a pipeline of robust deals for industrial, residential and office spaces across three jurisdictions, including greenfield projects. The company will also use J$700 million from the equity raise to pay down debt.
KPREIT’s investment strategy over the years has mainly been around identifying and acquiring value-added properties in jurisdictions that provide “better than average” risk-adjusted return on investment.
The company has been shifting away from the condominium market in Florida, where it disposed of six units, and is now seeking out more greenfield assets in other markets.
The company is headed by Kevin Richards as CEO and Garfield Sinclair as chairman.