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Capital Properties sees profits slip slightly in 2012

CAPITAL PROPERTIES INC. reported slight drip in profits during 2012, to $2.01 million, a less than 1 percent decrease from 2011.
Posted 3/12/13

EAST PROVIDENCE – Capital Properties Inc. reported a 0.9 percent drop in profit to $2.01 million, or 31 cents per share, during 2012 compared with earnings of $2.03 million, or 31 cents per share, during 2011.

The company’s revenue fell 1 percent to $8.16 million during the year. Excluding reimbursement for the cost of repairs for one of its petroleum storage tanks of $511,000 in 2011, revenue increased $431,000, or 5.6 percent. Capital Properties did not release fourth-quarter 2012 earnings information.

During 2012 as a whole, leasing revenue rose 8.4 percent, or $327,000, from 2011. The company attributed the increase to scheduled increases in rentals under long-term land leases.

In the company’s 10-K annual filing with the U.S. Securities and Exchange Commission, Capital Properties revealed that it refinanced the $2.7 million outstanding on a 2010 loan, adding an additional $3.025 million to the principal, which was then used to reward shareholders with an extraordinary dividend at the end of 2012 before the capital gains tax increase as part of the “fiscal cliff” deal reached by Congress and the president. Despite more than doubling the size of the loan, the low interest rate environment will allow the company to decrease its monthly interest payments.

The extraordinary dividend amounted to $2.25 per share, with $3.063 million being paid out in cash, while the company issued $11.787 million in 5 percent dividend notes to be paid to their holders over the next decade.

The company also shed more light on the coming end of its lease with Global Companies Inc., for which Capital Properties’ operates its petroleum storage facilities in East Providence.

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 is due on or before March 31. 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.

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