138 Student Living readies for APO
INSTITUTIONAL HOUSING company, 138 Student Living (138SL), is mum on timing but says the floating of an additional public offer (APO) should happen any day now.
The company recently secured the go-ahead from shareholders to do the APO in a bid to restructure its balance sheet.
CEO Cranston Ewan says the move has become necessary since the company's interest expense load has been proving to be a damper on company performance.
He told shareholders at the company's annual general meeting on Wednesday that despite the company's best-ever profit of $318 million, better performance can be unlocked if the company's finance costs can be brought down. Finance charges of $363.48 million were reported by 138SL , 50 per cent more than the previous year.
Speaking to the Financial Gleaner after the meeting, Ewan said the coming APO is an opportunity for accelerated company growth now that occupancy levels are at acceptable levels of above 90 per cent, having gone as low as 25 per cent during the COVID-19 pandemic.
“With our occupancy rebounding above the 90 per cent level, our strategy going forward is to realign the company's capital structure to one that is more optimal and sustainable by reducing our debt load,” Ewan said.
He said the company had managed to rebound and rebuild after the pandemic, posting net profit of $221 million in 2021, increasing to the $318 million for 2022.
Ewan also noted that the company managed to stage the rebound through cost-containment and efficiency enhancement. He said, in addition, there was improved customer satisfaction levels as the company tackled reported problems head-on.
Short-term rental generated $92 million for 2022. Ewan says this line of business is an area of possible growth.
“With this performance we see an opportunity to deepen our footprint in the group booking market segment,” Ewan told shareholders, adding that the company is focused on improving its short-term product, service quality, and guest experience, along with getting the necessary certification from the relevant bodies.
The company operates under a 35-year renewable lease from the University of the West Indies, Mona.
Ewan says the company continues to explore opportunities to grow top-line revenue, hinting at the possibility of growing the business overseas. Further, he cited regulatory strictures when pressed about the size of the APO, given the plans to expand and pay down its more than $4 billion debt.
“The strategies we have in place are expected to unlock shareholders' value and put 138SL in a better financial position to consistently pay dividends,” Ewan said.