EPF exits Overseas Realty; foreign party invests Rs. 385 m

Employees Provident Fund (EPF) has exited from Overseas Realty yesterday, with a related party to controlling shareholder upping their stake. A block of 16.2 million shares of Overseas Realty transacted at Rs. 25 each in a deal worth Rs. 405 million.



In total Overseas Realty saw 16.68 million shares traded for Rs. 416 million, accounting for 23% of the day’s turnover at the Colombo Bourse.

EPF, which as at 3 December 2015 had 14.86 million shares or a 1.67% stake in Overseas Realty, was the seller. The sale appears to confirm exit of EPF from Overseas Realty which owns the Twin Tower Echelon Square in Fort and mixed development project Havelock City. EPF had been selling down its stake as it held 29.4 million shares or a 3.31% stake in Overseas Realty by end September 2015.

The market saw net foreign buying of 16.65 million shares of Overseas Realty for Rs. 384.6 million, confirming the buyers to be a related party to controlling shareholder Shing Kwan Investment Company of Singapore tycoon S.P. Tao fame. It held a 56% stake in the company as at end 2015. The previous part sale of the EPF stake is believed to have been bought by foreign fund Pershing LLC/Averbach Grauson and Company, whose stake had increased to 3.92% by December from 2.67% in September.

Overseas Realty share price closed at Rs. 23.10, up by 50 cents. The 52-week highest share price of Overseas Realty is Rs. 26.50 and yesterday’s deal was done at Rs. 1.50 lower. Its net asset per share is Rs. 32.22.

Last week Overseas Realty said it completed another successful financial year recording a Group net profit of Rs. 3 billion for 2015 despite lower revenue.

Revenue from Property Leasing grew by 11% to Rs. 1.96 billion in comparison with last year, with high occupancy levels and higher rentals at the World Trade Center (WTC). The company expects to maintain good occupancy levels during 2016. Revenue from Other Services contributed an increase of 98% to Rs. 206 million. However revenue from Apartment Sales reduced from Rs. 4.3 billion to Rs. 0.97 billion with the remaining Sales of Phase 2 being recognised during 2015.

The Group net asset value per share as at 31 December 2015 increased by 5% to Rs 32.22 and the earnings per share for the year stood at Rs 3.44. In comparison with last year the profit attributable to equity holders of the Parent increased marginally by 1% to Rs 2.99 billion. The company announced a dividend of Rs. 1.50 per share for the year 2015 amounting to Rs. 1.3 billion.

Piling works of Havelock City Phase 3 was completed in early 2016 and pilling works of Phase 4 are expected to be completed during 2016. The sales launch of Phase 3 is planned for 18 March, comprising two more residential towers with 304 luxury apartments.

Good point : This is a negotiated deal that EPF has done without selling in the market and crash the price levels.

Bad point: Why should EPF sell such a good dividend paying share. They can earn regular divided + capital gains by holding