Dec 2006 Financial News

CPF Releases Year End Results

Dec 01, 2006

Results for the Year Ended September 30, 2006

All figures quoted in Barbados Dollars unless otherwise stated

Fortress Caribbean Property Fund (CPF) reported an increase in its Net Asset Value (NAV) from $1.28 as at September 30, 2005 to $1.36 at the year ended September 30, 2006. Total Assets rose 53.75 per cent to $113.071 million with Property Investments remaining the biggest component of Total Assets and increasing 23.54 per cent from 2005. There were sizable increases in Real Estate Development of 634.47 per cent from $2.596 million to $19.065 million and Available for Sale Securities which rose from $2.064 million to $9.551 million.

Revenues totaled $9.679 million up 31.37 per cent from $7.367 million in 2005. The main contributor to Revenue was Net Rental Income which made up over 67 per cent of the total. This item rose 28.44 per cent from 2005 to $6.489 million in 2006. Fair Value Gains increased 42.03 per cent to $2.590 million while Interest Income enjoyed a sizable increase from $0.002 million to $0.427 million. Gain on Available for Sale Items fell 73.27 per cent to $0.122 million.

Expenses however rose by a larger margin than Revenues due to hefty increases in Interest Expenses and Fund Management & Adviser Fees. Total Expenses actually grew 52.49 per cent to $3.141 million while Interest Expenses and Fund & Adviser Fees rose by 41.39 per cent and 78.90 per cent respectively.

Ultimately, Net Income before Minority Interest rose 23.17 per cent to $6.538 million while Net Profit on Ordinary Activities rose 24.39 per cent to $5.236 million.

Given these results we are forecasting Earnings Per Share of $0.10 for the year ended September 30, 2007. At the current market price of TT$4.90, CPF is trading at a high price/earnings ratio of 15.71 times. Its market to book value is approximately 1.15 times. It was state in CPF’s Annual Report for 2005 that the Managers of the Fund expect it to grow slowly over the next two years due to the developmental status of the Fund. Despite the fact that the Fund is trading at a relatively low market to book value, due to the cooling of the property market in the US which could impact the Caribbean coupled with the growing supply of developments, we currently recommend a HOLD on this share.

Sreshtha Tewari
WISE Research Team