A BISX-listed fund yesterday revealed it is targeting a second real estate acquisition before year-end 2024 as it bids to close the multi-million purchase of a Bay Street property next week.

Michael Anderson, president of RF Bank Bank & Trust, the Bahamas Property Fund’s investment manager and administrator, told Tribune Business the latter is aiming to buy an undisclosed western New Providence property focused on the short-term rental market as it bids to maintain momentum with its expanding portfolio.

Confirming that the Fund has $4m poised to invest in redeveloping the upper two floors of Beaumont House, located immediately to the west of Bay Street’s Straw Market, as soon as that deal closes, he added that it also plans to begin vertical construction on its $12m warehouse/storage facility to be constructed near the Carmichael Road/Gladstone Road junction before 2024 ends.

Mr Anderson told this newspaper that the storage facility, known as Bahamas U-Store Ltd, as well as a fully redeveloped Beaumont House are both expected to make their first full-year contribution to the Fund’s earnings in 2026 as each project is set to take between a year and 18 months to complete.

Again acknowledging that the Fund’s development had been “stalled” for some time, he added that its acquisition moves will help it become “what we’d set it out to do a number of years ago” as a vehicle designed to give investors an opportunity to invest in real estate without the difficulties created by illiquid assets that sometimes prove hard to sell.

Disclosing that the BISX-listed real estate investment trust is already looking beyond Beaumont House, Mr Anderson told Tribune Business: “We’re looking to further develop property out west, which we expect to be more in the short-term rental market.

“We’re still trying to finalise an arrangement for that. We’ve been speaking to the seller for the last six months, and are hoping to get that completed in the last quarter of this year if it still goes ahead. We’re still looking at other opportunities.”

As for Beaumont House, the RF Bank & Trust chief said the ground floor retail tenants and second floor restaurant will “cover the cost of holding the property” until the renovations to the top two floors are complete and start to generate consistent rental income.

“We haven’t yet closed it. We expect to close it next week,” Mr Anderson added of the $4.3m acquisition. “We’re just waiting on that project. It’s just really having to go through the title searches with the lawyers and those normal kinds of processes. We expect to close next week.

“We have capital ready to do the renovations and are looking at different designs for different uses of the property. We’re looking at putting it back to office space or do short-term vacation rentals. At this stage, our preference is for short-term rentals like Airbnbs where tourists would like to stay downtown, looking out over the harbour or, if they are on Bay Street, looking out at Bay Street.

“Our sense is that there’s demand for property downtown. We’re trying to get a better sense of what [usage of that space] should be. We have $4m tied up and planned for that. At this stage it’s still a bit open. It will take us a year to 18 months to get the whole renovation completed. I don’t think we’ll start to make significant revenues on the top two floors for 18 months,” Mr Anderson continued.

“The remaining two floors, the ground floor is retail space and that continues to be rented, and then there is the restaurant on the second floor. Those two properties we anticipate will cover the cost of holding the building until the renovation gets completed. That property will not be accretive to income earnings right away but we should cover cash flow and costs for those two floors.”

Meanwhile, towards New Providence’s southern side, the RF Bank & Trust president confirmed that the Fund is also set to soon begin vertical construction on its warehouse and storage facility. “We’re getting ready to start on the warehouse,” Mr Anderson said. “We’re waiting for final approval for that, but are hoping to start that in the final quarter of this year.

“We have cleaned up the site and the warehouse project is anticipated to take all year. We should be in the rental market with the warehouse in the final quarter of next year. We do have all the layouts in terms of the size of the warehouse mapped out but have not done rental income projections.”

Speaking to both Beaumont House and Bahamas U-Store Ltd, Mr Anderson said: “Those two properties will not be driving revenues next year. We expect that it will be 2026 when both of those projects come to fruition and start to impact rental revenues.

“We expect most of our rental properties to be generating returns of 15 percent per annum. We don’t take on projects which are below a return of 15 percent. Hopefully we will start to generate cash from them and there will be more cash flow coming through.

“We’re financing both those properties through a combination of mezzanine and bank debt. We’ve sourced mezzanine and bank debt capital already. It’s just a matter of getting both projects to fruition. The Fund is back in that development/acquisition space and we’re looking at opportunities for both. If we see decent development opportunities we will take them on, and if we see decent acquisition opportunities we will equally see if we can take those on as well.”

Mr Anderson said combined acquisition and development costs for Bahamas U-Store Ltd will likely come in between $10m-$12m, while those for Beaumont House will fall in the $8m-$9m range once the deal closes and renovations proceed.

“It’s nice to see the Property Fund become what we’d set it out to do a number of years ago,” he added. “It got stalled and it’s nice that we’ve started again. We’re kind of motivated to get our Fund to work properly and create opportunities for investors. We thought the Property Fund would be a great asset for the local market.

“It was always the idea to create liquidity out of a fairly illiquid asset and give people an opportunity to buy into buildings that otherwise they would not have a chance to. They could also sell their shares without the transfer tax on shares that applies to property.”