Pulse looks to sell its real estate holdings
Shareholders of Pulse Investments Limited have given the model agency's board permission to offload the company's real estate holdings, although CEO and chairman Kingsley Cooper says there are no immediate plans to sell.
Pulse Investments has a stake in Pulse Centre at 38A Trafalgar Road in Kingston as well as the Villa Ronai Spa and Suites in Stony Hill, St Andrew. The modelling agency has operational control of the properties via a 49-year prepaid lease from Cooper. The lease was prepaid in 2005-2006 via an issue of shares in Pulse to Cooper, who now owns 76 per cent of Pulse Investments.
Cooper remains the principal owner of the real estate holdings - which have a carrying value of $1.1 billion on Pulse's balance sheet, with $392 million classified as construction in progress - but Pulse has a substantial interest, as a result of the prepaid lease and capital investments in the properties over time. Cooper said that as a result of these arrangements, 100 per cent of all income derived by the properties flows to Pulse.
The company rents 60 per cent of the Trafalgar Road premises to boutique and beauty salon operators, a restaurant, offices and other shops. The Villa Ronai property is rented periodically for events and film and television shoots.
Last Tuesday, the 10 shareholders who attended the company's annual general meeting, of the 257 on record, voted unanimously in favour of the disposal of Pulse's interest in the real estate.
"This resolution does not mean that the property or the real estate interests is going to be sold. What it does is give the directors the option to sell it once a proper valuation has been done," said the executive chairman. It's unclear whether Cooper himself would seek to buy Pulse's stake.
Pulse will seek a valuation of the company's real estate investments, and was authorised to sell once the valuation is in line, "more or less", with the book value of the assets. Pulse will distribute at least 50 per cent of the sale proceeds to shareholders as dividend when the properties are sold.
Pulse is one of a few listed companies that pay no dividend to shareholders. Additionally, the stock tanked last year to 30 cents per share but has since recovered to 37 cents, although still well off its one-year high of 99 cents per share.
Pointing to the performance of the stock, Cooper speculated that it might be the market's way of signalling that it "is more interested in dividends". He said the disposals would allow shareholders to reap some returns from the stock.
"Assuming it happens ... the advantage of selling the real estate is that the shareholders will benefit," he said.
Pulse's stock was suspended from trading last December for the late filing of financial reports. The suspension has now been lifted.