JZ CAPI ZDRP
JZ CAPITAL PARTNERS LIMITED
(a closed-end investment company incorporated with limited liability under the
laws of Guernsey with registered number 48761)
Q1 2016 Interim Management Statement
20 June 2016
JZ Capital Partners Limited (LSE: JZCP.L, the "Company" or "JZCP"), the London
listed fund that invests in high-quality US and European micro-cap companies
and US real estate, today releases its Interim Management Statement for the
period 1 March 2016 to 31 May 2016.
Results Highlights
* Semi-annual dividend of 15 cents per share paid on 10 June 2016
+ Including previously paid dividend of 16 cents in November 2015,
implied dividend yield of 5.4%, based on the stock price at 31 May 2016
* Net Asset Value ("NAV") of $866 million (29/02/16: $852 million)
* NAV per share of $10.32 (29/02/16: $10.15) - this reflects an increase of
1.7% per share, or a total NAV return, including the above dividend, of
3.2%
* Valuation uplift of approximately 4.8% before expenses, finance costs and
foreign exchange effects:
+ US micro-cap, European micro-cap and real estate portfolios written up
by 13 cents, 6 cents and 30 cents, respectively
* Remaining ZDPs (£32.9m) due 2016 to be fully paid off on 22 June 2016
* $44 million invested and $10.1 million realised across the US micro-cap,
European micro-cap, real estate and other portfolios
* At the end of the period, the portfolio consisted of 74 micro-cap
investments across nine industries and 55 properties located in New York
and Miami
David Zalaznick, Founder and Investment Advisor of JZCP said: "The Company
achieved a total NAV return of 3.2% for the first quarter ended 31 May 2016
with positive valuation uplifts seen across the underlying portfolio in all
major assets classes - US micro-cap, European micro-cap and real estate."
Net Asset Value
The total NAV return per share (including the dividend) was 3.2% for the
period, from $10.15 to $10.32, driven primarily by write-ups at our healthcare
revenue cycle management vertical and Roebling property in Brooklyn, New York
(due to a new third-party appraisal).
JZCP declared a dividend of 15 cents per share, which was paid on 10 June 2016.
For the past twelve-month period, including a previously paid dividend of 16
cents in November 2015, the implied dividend yield, based on our stock price at
31 May 2016 is 5.4%.
JZCP's liquidity continues to be strong. As of 31 May 2016, our cash and cash
equivalents was $107.4 million.
NAV RETURNS
Net Asset Value per Ordinary Share as of 1 March 2016 $10.15
Increase/(decrease) in NAV per share due to Capital Gains and Income received/
accrued on Investments
+ US Micro-cap
0.13
+ European Micro-cap
0.06
+ Real Estate
0.30
+ Other Investments
0.03
Other increases/(decreases) in NAV per share
- Change in CULS fair value (0.02)
- Finance Costs
(0.06)
+ Foreign exchange effect
0.04
- Expenses
(0.16)
- Dividends Paid (10 June 2016)
(0.15)
Net Asset Value per Ordinary Share as of 31 May 2016 $10.32
The US micro-cap portfolio increased 13 cents, primarily due to a write-up at
our healthcare revenue cycle management vertical (11 cents) and co-investments
Salter Labs (1 cent), Medplast (2 cents) and Vitalyst (1 cent), as well as
escrows received (4 cents). Offsetting these uplifts were decreases in value
at: co-investment Sloan LED (2 cents), our legacy Hoveround power wheelchair
business (4 cents), and our water vertical (5 cents).
The European micro-cap portfolio increased 6 cents, primarily due to write-ups
at Fidor Bank (3 cents) and Petrocorner (1 cent).
Finally, the real estate portfolio increased by 30 cents, primarily due to a
write-up at our Roebling property in Brooklyn, New York, based on a newly
received third-party appraisal.
The chart below summarises cumulative total shareholder returns and total NAV
returns for the most recent three-month period, twelve-month period, three-year
period and five-year period. Note that the beginning number of shares for each
period (except for the three-month period) was 65,018,607, while the number of
shares at the end of the period was 83,907,516, thus negatively affecting the
total NAV return per share and total shareholder return per share.
31/05/2016 Since 29/02/ Since 31/05/ Since 31/05/ Since 31/05/
2016 2015 2013 2011
Share price £3.90 £3.97 £4.55 £4.89 £4.24
(in GBP)
Dividends paid - $0.15 $0.31 $1.09 $1.58
(in USD)
Total - 1.0% -9.7% -9.2% 17.0%
Shareholders'
return (GBP)1
NAV per share $10.32 $10.15 $10.69 $9.90 $9.06
(in USD)
Implied dividend 5.4% 6.1% 4.7% 3.9% 2.3%
yield2
NAV per share - 3.2% -0.5% 16.5% 34.0%
total returns 1
NAV to market 45% 46% 35% 25% 23%
price discount
______________
1. Total returns are cumulative and assume that dividends were reinvested
2. For 5/31 dates in 2016, 2015 & 2013, implied dividend yield calculated as
the addition of dividend paid in the November immediately preceding the 5/
31 date and the June dividend paid immediately following the 5/31 date,
divided by the stock price at the 5/31 date. For 2/29/16, dividend yield
calculated as the addition of the June & November 2015 dividends divided by
the stock price at 2/29/16. For 5/31/2011, dividend yield calculated as the
addition of the July & November 2011 dividends divided by the stock price
at 5/31/2011.
RECENT ACTIVITIES
On 12 May 2016, JZCP declared a semi-annual dividend of $12.6 million, or 15
cents per share. This was paid on 10 June 2016.
Significant Investments and Realizations
US Micro-cap Investments - Verticals
Industrial Services Solutions ("ISS") Vertical
During the period, JZCP's ISS vertical completed the add-on acquisition of WPS
Industries, which required no cash from JZCP. Since inception, ISS has made 24
acquisitions.
Healthcare Revenue Cycle Management Vertical
In March 2016, JZCP invested $1.4 million to acquire Prospective Payment
Specialists ("PPS"). PPS provides outsourced contract coding, coding reviews,
audits, and educational services to large hospital systems across the country.
Additionally, in April 2016, current portfolio company Avectus acquired
Healthcare Receivable Professionals Inc., strengthening Avectus' position in
the third party liability billing space. This acquisition required no cash from
JZCP.
US Micro-cap Investments - Co-investments
In March and April 2016, JZCP invested a total of $7.5 million in Peaceable
Street Capital, a specialty finance platform for real estate entities.
Real Estate Investments
In March 2016, JZCP invested $12.5 million to acquire a portfolio of properties
in Miami's Wynwood neighbourhood.
In March 2016, JZCP invested a further $10.6 million to pay down a mezzanine
loan made in conjunction with the acquisition of certain Design District
(Miami) assemblage properties.
In May 2016, JZCP invested $8.2 million to acquire another building on Bedford
Avenue in the Williamsburg neighbourhood of Brooklyn, NY, adjacent to certain
of our other properties on Bedford Avenue.
Realisations
In April 2016, JZCP received proceeds of $5.9 million from the refinancing of
three separate properties located in Brooklyn, NY, including $3.9 million from
our original property on Bedford Avenue in Williamsburg.
PORTFOLIO SUMMARY
At 31 May 2016, the Company's portfolio consisted of 74 micro-cap investments
across nine major industries and 55 real estate properties.
($'000)
At 31/05/16 At 29/02/16 % Gross Assets 31/
05/2016
US Micro-cap Portfolio 402,840 386,173 34.1%
European Micro-cap Portfolio 178,493 168,797 15.1%
Real Estate Portfolio 416,681 366,158 35.2%
Other Portfolio 68,623 64,320 5.8%
Total Private Investments 1,066,637 985,448 90.2%
Listed Corporate Bonds 13,368 13,036 1.1%
UK Treasury Gilts 47,694 45,608 4.0%
Cash 46,308 91,937 3.9%
Total Listed Investments (and Cash) 107,370 150,581 9.0%
Total Investments (and Cash) 1,174,007 1,136,029 99.2%
Other Current Assets 9,050 3,551 0.8%
Total Investments (and Cash) 1,183,057 1,139,580 100.0%
At 31 May 2016, 9% of gross assets were invested in "liquid" assets, which
consist of cash, UK treasury gilts and corporate bonds. These asset classes
are valued at prices quoted by third parties. The remaining portion of the
portfolio was invested in private investments in US or European micro-cap
companies, real estate or mezzanine debt. These investments are valued at fair
value by JZCP's directors each quarter.
We value our privately held businesses carefully. Our average multiple used for
our US micro-cap businesses is 8.2x trailing EBITDA. In addition, we do not
have substantial debt in these businesses. The multiple of debt senior to
JZCP's position is approximately 3.7x EBITDA.
Top Ten Investments
Our ten largest investments as of 31 May 2016 are summarised below:
($000's) Asset Valuation % Gross Assets
Category 31.05.2016 31.05.2016
Industrial Services Solutions US Micro-cap 85,458,293 7.2%
Vertical.
Factor Energia European 64,313,622 5.4%
Fulton Real Estate 63,712,877 5.4%
Greenpoint Real Estate 56,920,617 4.8%
Bright Spruce Fund, LP Other 48,743,566 4.1%
TierPoint US Micro-cap 44,312,976 3.7%
Redbridge Bedford Real Estate 41,459,216 3.5%
Water Vertical US Micro-cap 40,923,575 3.5%
BH Hospital Services US Micro-cap 38,114,315 3.2%
Roebling Real Estate 34,241,782 2.9%
Top Ten Investments 518,200,839 43.7%
Remaining Assets 664,856,527 56.3%
Gross Assets 1,183,057,366 100.0%
Balance Sheet
Below is a summary of JZCP's balance sheet as of the relevant dates:
($000's) 31.05.2016 29.02.2016
Cash and cash equivalents 107,370 150,581
Investments & other assets 1,075,687 988,999
(-) Other net liabilities (209,180) (185,771)
(-) ZDPs due 2016 (47,071) (44,217)
(-) ZDPs due 2022 (61,191) (57,854)
Net Asset Value 865,615 851,738
At 31 May 2016, "other net liabilities" includes $61.1 million from the
issuance of Convertible Unsecured Loan Stock ("CULS") in July 2014, which
carries an interest rate of 6%, and $97.9 million from a six-year term loan
with Guggenheim Partners, which carries an interest rate of LIBOR plus 5.75%.
The remaining ZDPs due 2016 will be fully paid off on 22 June 2016.
For further information:
Ed Berry / Kit Dunford +44
(0) 20 3727 1046 / 1143
FTI Consulting
David Zalaznick +1
212 485 9410
Jordan/Zalaznick Advisers, Inc.
Paul Le Ray +44
(0) 1481 745815
JZ Capital Partners, Ltd.
About JZCP
JZCP is a London listed fund which invests in high quality US and European
micro-cap companies and US real estate. Its objective is to achieve a superior
overall return comprised of a current yield and significant capital
appreciation. JZCP receives investment advice from Jordan/Zalaznick Advisers,
Inc. ("JZAI") which is led by David Zalaznick and Jay Jordan. They have worked
together for 30 years and are supported by teams of investment professionals in
New York, Chicago, London and Madrid. JZAI's experts work with the existing
management of micro-cap companies to help build better businesses, create value
and deliver strong returns for investors. JZCP also invests in mezzanine loans,
first and second lien investments and other publicly traded securities. For
more information please visit www.jzcp.com.
JZ CAPITAL ZDP NEW ZERO DIV PREF SHS NPV : PARTNERS LTD - Interim Management Statement
June 20, 2016 at 11:31 am IST
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