Benchmark (Bahamas) Limited has experienced some volatility, but a recent move into commercial real estate and other possible avenues of diversification could make the firm a good play for prospective investors.
Local and international swings in the markets have stung Benchmark Limited in the past, according to Jamaal Stubbs, senior analyst at CFAL. Branching out into new areas of investment may provide an effective hedge.
Stubbs said the firm’s plaza on Carmichael Road is at least 70 percent full, and once fully leased it would generate $450,000 in annual rental revenues.
“The plaza is critical,” he told Guardian Business.
“It seems to be fairly successful so far. It’s supposed to be the new location for Bank of the Bahamas (BOB) and that should be positive for profitability and anchor the development. Nassau Underwriters is another quality tenant.”
According to Stubbs, the remaining 30 percent of the plaza should be filled once BOB moves into the premises. He said some prospective tenants are waiting for the bank to open, as that will ensure foot traffic. BOB has experienced a few delays setting up shop, with the original opening expected last year.
“As soon as the bank gets in the remaining spots will be signed quickly,” he told Guardian Business.
Stubbs speculated that Benchmark may seek other business ventures or source more equity capital over the short term to achieve success as a viable investment option.
He felt more diversification was needed to cover losses in the rest of its portfolio.
As of the third quarter last year, Benchmark reported a net loss of $1.65 million.
While revenues improved by 34.96 percent during this period, general administrative costs expanded by 23.9 percent, resulting in a net investment loss of $232,300 as of September 2011.
The company did experience a net gain of $65,700 in some of its investments, but this uptick was dwarfed by the portfolio’s net movement in unrealized losses of $1.48 million.
Overall total assets contracted by $1.58 million, or 2.73 percent.
Founded back in 2000, Stubbs noted that the firm’s investment portfolio fared moderately well in the early going, but has suffered some substantial drops in recent memory.
In the past, Benchmark also attempted to diversify after buying a stake in an appliance and furniture store.
“That didn’t turn out too well,” he added. “The company didn’t perform and it was written off.”
He said Benchmark is currently sitting on a modest pile of equity capital, which may be used for other ventures in diversification.
In the end, while the plaza is important, the success of the firm hinges on the investment portfolio, he said, and whether it can ride out the storm in international markets.
If the existing equity capital dries up, the company might have to once again issue preference shares or attempt to raise capital through other means.
In 2010, Benchmark (Bahamas) Limited issued $2 million in preference shares in order to avoid its overall equity capital falling into a negative position. The move was the second time in as many years the company issued preference shares to boost capital.
In 2009, they raised $1 million in preference shares.
Jeffrey Todd
Nassau Guardian Business Editor
