Aberdeen Standard's Investment Approach
Maintain a balanced focus on established, revenue-producing assets and new development projects
The Company’s principal strategy is to balance its investment Portfolio between established, revenue producing assets in the Company’s main operating segments, as exemplified by the Company’s interests in the Miramar Trade Center and the Hotels Assets, on the one hand, and new development projects, refurbishments and other capital investments that will contribute to long-term capital growth, on the other hand. Under this strategy, the Company has invested in existing Cuban joint venture companies that own mature assets, as well as in new development projects. The Board believes that this will provide stable and sustainable cash flows, with a strong potential for future growth.
Remain the dominant foreign investor in Cuba’s commercial real estate sector
The Company’s strategy regarding commercial properties is to remain the dominant foreign investor in Cuba’s commercial real estate sector through the addition of new properties within the existing Cuban joint venture companies in which it already has an interest, whether by acquisition or new construction.
Remain a leading foreign investor in Cuba’s tourism real estate sector
The Company intends to continue to be one of the leading foreign investors in the tourism real estate sector by maintaining a portfolio of investments in high end (4 and 5-star) hotels located in Cuba’s main tourist and business destinations.
Be flexible in the deployment of cash flows
The Company’s interests in commercial real estate and hotel properties provide revenue streams that may be utilised for new acquisitions, investments in the development of new properties, upgrading of existing properties or the payment of dividends to Shareholders. Given the time necessary to obtain all government approvals and to construct new projects in Cuba, one of the Company’s main focuses in the last five years has been to generate stable and sustainable cash flows. At the same time, the Company also intends to continue to invest in Cuban joint venture companies that are in the process of developing commercial real estate and hotel projects. These development projects have the potential to create long-term capital growth for Shareholders.
The Company invests surplus funds in interest-bearing structured finance transactions and other financial instruments and commercial paper relating to Cuba, through the FINTUR finance facilities. The Company seeks to structure the repayment terms of such facilities to approximate the time when funds will be required for future investment requirements of new and current investments in Cuban joint venture companies.
Use leverage prudently and optimise the Company's capital structure
Following the full repayment of the Bridge Loan shortly following Initial Admission, the Group will be debt-free, both at the holding company level and at the level of each underlying investment. The Company believes that the absence of debt provides the Company with the ability to leverage its assets in the future, should the cost and other conditions for debt financing for Cuban assets become more acceptable, thereby allowing the Company to optimise its capital structure and to make further investments or to return capital to Shareholders. The future capital structure of the Company will be dependent on the cost and availability of debt financing, the ability of the Company to develop or acquire new investment projects and the continued improvement in local market conditions.
Be adaptable to changes in the Cuban market
The present business strategies of the Company have been developed in the context of the existing circumstances of the Cuban foreign investment market. The Company is presently managed with a view to maximising profitability and cash flow in existing market conditions. The strategies of the Company are not dependent on any change in these market conditions. However, the Company believes that any improvement in local market conditions, including general economic growth in the Cuban market, the continued increase of tourism in Cuba, the possible discovery of significant new oil reserves in Cuban waters, the possible adoption by the Cuban government of new economic reforms, and the potential improvement of relations between the United States and Cuba and/or the relaxation or lifting of U.S. travel restrictions and/or the U.S. Embargo, amongst others, would have a positive effect on the results and performance of the Company. The Investment Manager will follow developments affecting these local conditions closely and will adapt the strategies of the Company to changing circumstances.
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