EAST PROVIDENCE – Capital Properties Inc. reported a 33.5 percent drop in profit to $340,000, or 5 cents per share, during the first quarter of 2013 compared with earnings of $511,000, or 8 cents per share, during 2012.
Total revenue rose 3.8 percent year over year during the quarter to $2.06 million. Capital Properties’ revenue has two sources: leasing real estate in Providence’s Capitol Center area and leasing a petroleum storage facility. During the first quarter, revenue from the real estate leasing segment rose 5.1 percent to $1.06 million and revenue from the petroleum storage facility rose 2.3 percent to $999,000.
The company’s drop in net income was at least partially attributable to a $152,000 charge for dividend notes during the first quarter of 2013, the result of a special dividend issued at the end of 2012 before new tax rates went into effect. No such charge existed during the first quarter of 2012.
General and administrative expenses increased $92,000 due to legal and consulting fees incurred in connection with marketing of its East Providence-based petroleum storage facility.
The fees were primarily related to the coming end of its lease with Global Companies Inc., for which Capital Properties operates the East Providence petroleum storage facilities. Global’s lease expires April 30 and in May 2012 Capital Properties announced that it would not renew.
However, previous to that, Global had triggered an option to buy the terminal. As a first step in the process, Capital Properties provided Global with an adjusted book value of the terminal of $19.7 million. Global then proceeded to the next step in the process, in which the two entities hired an appraiser to put a value to the property. Capital Properties’ appraiser came back with a value of $46.2 million, while Global’s appraiser set the property’s value at $15.4 million.
Since the two values were not the same, a third appraiser was engaged to find a value, which was due on or before March 31. Capital Properties Treasurer Barbara J. Dreyer told Providence Business News that the company had yet to receive the results from the third appraiser and did not have a new deadline.
Should Global want to buy the terminal (and it can still back out of the sale), and if the third appraisal value does not agree with either of the first two, it will be required to buy the facility for the greater of the adjusted book value ($19.7 million) or the average of the two appraised values that are closest to one another.
If Global decides not to exercise the option to buy, Capital Properties previously has said that it will have to re-evaluate its options, which could include finding another buyer or another fuel company to partner with.
As it stands, Global has until May 1 to remove all of its inventory and clean the tanks, an undertaking that began in March, according to Capital Properties.