0

Bad News For Bisx Shareholders

EDITOR, The Tribune

Yesterday did not bring good news to the long-suffering shareholders of BISX-listed Bahamas Property Fund (BPF). Set up over 15 years ago to imitate American REITs (Real Estate Investment Trusts) by acquiring commercial properties and pooling them to create equity shares that would trade as liquid securities, it was a good idea but proved tough to execute in our limited property market.

Unfortunately,  BPF has found  only three (yes, three) properties for its portfolio: the Bahamas Financial Centre in downtown Nassau, One Marina Drive on Paradise Island and Providence House on East Hill Street. The first two have had a variety of banks and other tenants who drifted away leaving 60-65 percent occupancy rates, while the third was a blue-chip investment fully rented by top accountants PriceWaterhouseCoopers (PWC).

But yesterday The Tribune  reported  that PWC too would be moving out. While a new tenant was expected to be signed up “reasonably soon”, inevitably a revenue gap of several months was likely. The past losses combined with this new hit caused BPF to declare a downward asset revaluation of $2.206m and an operating loss of $828m for nine months. No dividends have recently been paid, or proposed.

The news  was released by a BPF Board member, Mr. Michael Anderson. Although the BISX website shows a full Board of Directors including such eminent Bahamians as Sir William Allen, Godfrey Kelly CMG and Mr Barrie Farrington, strangely no one is designated chairman or managing director of  BPF, leaving Mr Anderson as company spokesman. His full-time job is President of Royal Fidelity Merchant Bank & Trust (RFMBT), the well-known joint venture between Royal Bank and the Fidelity Group.

BPF is in effect run by Royal Fidelity. The Fund was organised by an original Fidelity company, who also arranged the initial placement of Fund shares @$5.00. Ever since 2002, Fidelity has served as the Fund’s Investment Manager, earning a fee for its services and making all decisions about property acquisitions and administration, the fund’s sole business.

The fund’s board of directors apparently does nothing more than rubber-stamp these decisions. Neither the Securities Commission nor BISX has commented on this failure to observe standard corporate governance policies, or the absence of Fund officers, and the BPF shareholders have been inert.

They  cannot easily escape this debacle, even at a loss. Despite 26 unfilled sell orders for over 200,000 shares, not a single share has traded for over a year, due to BISX’s own peculiar rules that restrict trading. Although licenced as a securities dealer, Fidelity has been taken no initiative to arrange any trades or share buy backs.

As their most attractive option, the ordinary shareholders (fewer than 100 on the register) could call a special meeting to dissolve BPF as a fund and sell off the individual properties at best market prices, distributing the proceed to BPF shareholders.

However, this action could probably be blocked by RFMBT through its holding of so-called “Management Shares” issued from BPF’s authorised capital.

This is another example of how the best interests of  public shareholders can be frustrated by our corporate finance practices tolerated, to date, by the Securities Commission and BISX.

Richard Coulson    

Nassau

December 13

Comments

John 1 year, 6 months ago

Many businesses have been losing money since The Great Depression hit in 2008 and many others are still not making a profit. Does a lack of profit always mean it is time to close shop and dissolve a company? One would think that the recession would have given Bahama Property Fund the opportunity to acquire additional properties and extend and even diversify its portfolio. A chance to get bigger and more profitable when the recession ends. But unfortunately that didn’t happen and unfortunately the country seems to be slipping into another recession before recovering from the first. Also unfortunate is the fact that because of the recession being so hard hitting and long lasting many businesses that may have been potential clients of BPF have restructured, downsized or totally disappeared off the horizon. And because of advances in technology or new restrictions, others do not see the need to have a brick and mortar presence in this jurisdiction. Just watch what is going on with Royal Bank as it twists and wriggles itself and slims down trying to right size and return to profitability. Apparently the full service, large and well staff branches will no longer be the hallmark if RBC does not leave the Bahamas and Caribbean markets completely. A noted US economist said ‘You can no longer discuss Economics without discussing the ‘Amazon Effect.’ This refers to one line companies like Amazon that are gaining more and more market share while not really having a physical presence in a market or even a country. They create threats to the existence of malls and to companies that own and manage properties, like BPF. Amazon’s revenue is soon expected to surpass that of Walmart, especially now that it has ventured into both the food and shipping businesses.

0

killemwitdakno 1 year, 6 months ago

The title should say Bahamas property Fund, not BSIX. BSIX is doing just fine.

0

John 1 year, 6 months ago

A school teacher predicted more than 40 years ago that even the human body will adapt to the changes in life brought on by technology. As humans are required to do less and less physical labor, the body will become weaker and weaker while the brain will develop the ability to do more and multitask. Well here in the Bahamas people are eating less and less food that is healthy and nutritious. Women are becoming more and more obese and many young men are consuming more and more drugs and alcohol. Everyone seems to want to be in a state of mental suspension where reality is not necessarily the dominant factor.

0

Sign in to comment