Home' Trinidad and Tobago Guardian : May 24th 2015 Contents MAY 24 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
NEWS | SBG3
In Monday s newspapers, there was a
full-page advertisement announcing
that an entity named Stallion Prop-
erty Trust (SPT) would make an ini-
tial public offering of common and
fixed income units starting on May 18.
The promoters of the SPT IPO propose to
raise $382.39 million by selling the follow-
ing units to the public:
• Some 5,072,957 common units at $20
each = $101.45 million
• Some 100,000 three-year, three per
cent fixed income units @$1,000 = $100
• Some 180,945 seven-year, 4.5 per cent
fixed income units @ $1,000 = $180.94
The prospectus indicates that SPT is
looking to raise the $382.39 million from
the public in order to pay off debt of $361
million, which was used to acquire nine
The underlying asset of the Trust is a 100
per cent ownership of a company called
Endeavour Holdings Limited, which owns
a diversified portfolio of nine commercial
real estate properties.
Those nine properties are four outlets of
the local pharmacy chain SuperPharm at
Valsayn, Chaguanas, Westmoorings and
Gulf View. Also included are Price Plaza
North, Price Plaza South, Brian Place in St
Clair, Tumpuna Park warehousing and in-
dustrial compound and a building leased to
the Ministry of National Security in Aran-
The four directors of SPT are John Tang
Nian, a retired banker, Amalia Maharaj, an
attorney at Pollonais, Blanc, de la Bastide
and Jacelon, John Aboud, business execu-
tive, and Joseph Rahael, property devel-
Rahael is part of the privately owned, Ra-
hael-family owned Amera Corporation,
which has been one of the most active
commercial property developers in T&T in
the last decade.
Rahael-owned companies are responsi-
ble for Briar Place in St Clair, and the new
building on Queen s Park West, a stone s
throw away from the US Embassy building.
Rahael-owned companies were also in-
volved in the controversial Milsherv devel-
opment in Tobago, and the financially
troubled, billion-dollar Renaissance proj-
ect in Shorelands.
On Friday night, Rahael responded to
some questions that had been sent to him
earlier in the week.
The questions were sent after Rahael invited
the Business Guardian to conduct an interview
with him in which he would give details of
Among the questions asked were:
Q: Why is SPT attempting to raise money
from the public based on an audit for Endeav-
our Holdings Ltd, which represents the finan-
cial position of EHL as at April 30, 2014?
Shouldn t the audit be more up to date?
A: The audited accounts for FY15 will
commence shortly as our fiscal year end is
April 30, 2015, however given the nature of
the investment, which is rental income, the
2015 position will not be materially different
and therefore rather than further delaying the
IPO, a decision was made and accepted by
the SEC, that the audited accounts for FY14
Given the sharp decline in
T&T s export earnings as a result of lower oil
and gas prices, can it really be argued that
"the 2015 position will not be materially dif-
ferent" to 2014?)
Q: The prospectus states that EHL s
investment portfolio comprises nine properties
that have a market value of $831.6 million.
Who conducted the valuations on these prop-
erties and how recently were the valuations
A: The property valuations were con-
ducted by Brent Augustus & Associates with
the exception of Briar Place which was valued
by Terra Caribbean. These valuations were
conducted in January, April and October of
2014, and reviewed and accepted by PWC as
part of their audit and their report.
Q: My understanding is that SPT is raising
$382.39 million in order to pay off debt of
$361 million, used to acquire the nine prop-
erties. What happens to the property acqui-
sitions if the IPO is not successful?
A: These properties have been either
built or purchased by EHL for many years
now. It is an existing portfolio of already built
and acquired properties with a history of
proven cash flow and solid tenants with no
construction or acquistion risk.
Nothing untowards happens to the port-
folio in the unlikely event the IPO is under-
subscribed. Any funds raised over and
above the debt stays in the company as
working capital /reserve.
Q: Why not opt to refinance the debt
with the banks?
A: We are refinancing bank debt by going
to the public. As you would be aware investors
are still earning currently very low returns
and the banks are still earning a spread in
excess of five per cent. Therefore we are cap-
italising on that opportunity to give the general
public an opportunity to earn higher returns
whilst at the same time reducing our cost.
The Central Bank increased
the repo rate on four occasions between Sep-
tember 2014 and March 2015 in order to
increase the returns on local, especially fixed
Q: Why is there no mention of the Ren-
aissance development in the prospectus and
the unresolved issues involving nearly $1 billion
owed to the two Canadian banks?
A: Not applicable. Although there is some
common ownership, these are two separate
entities with different ownership and no
Q: Will any of the money raised in the
IPO go to pay off the Renaissance debts?
A: No. EHL debt only.
Mr Rahael also submitted additional in-
formation, which had not been asked for:
"The shareholders are selling only 15 per
cent of the equity and have placed a volun-
tary three-year sales restriction on their
remaining 85 per cent thereby negating the
issue of shareholders raising money for
themselves and demonstrating their own
long-term confidence in the company.
An analysis by the brokerage house
WISE, released on Friday, estimated that a
price/earnings (P/E) multiple of 14.61X
based on the offer price of $20 per common
A five-year projection provided by the is-
suer in the SPT prospectus estimated rev-
enue of $54.3 million and profit of $46.3
million in the 2015 financial year.
For the 2016, the issuers project that rev-
enue will decline by 28 per cent from $54.3
million in the 2015 financial year to $38.3
million in 2016. The issuers project that net
profit will decline by 44 per cent from
$46.3 million in the 2015 financial year to
$26 million in 2016.
Despite the decline in net profits, SPT
projects that it would be able to distribute
$10.14 million in dividends to common
The semi-annual cash distributions to
common unitholders by the Trust is at the
discretion of the directors of the trustee. It
is projected that a minimum of 90 per cent
of the Trust s available cash shall be dis-
Should you climb aboard the stallion?
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