CEIBA Investments has published its annual results for the year ended 31 December 2024, highlighting a tough year for the company, driven largely by deteriorating conditions in Cuba and geopolitical developments. The company saw its net asset value (NAV) fall 18.0% in US dollar terms to US$130.0m, with the NAV per share down to US$0.94 (75.3p), from US$1.15 (90.3p) the year before. CEIBA’s share price ended the year at 24p, representing a wide discount of 68% to NAV, which the board describes as “very concerning”.
The re-election of Donald Trump and the reimposition of Cuba’s designation as a State Sponsor of Terrorism (SST) have compounded existing economic challenges on the island, contributing to liquidity shortages, power outages, high inflation, and a contracting tourism sector. These issues weighed heavily on valuations of the company’s Cuban real estate holdings, particularly hotels, despite operational resilience.
The company’s largest commercial property holding, the Miramar Trade Centre, maintained a high occupancy rate of 97.5%, with revenues up 2.2%. However, increased discount rates used in valuations and challenges in repatriating hard currency dividends from Cuba weighed on its valuation, which fell 3.4% to US$46.2m.
In the hotel portfolio, revenues rose 9.2%, but net income fell 23.4% due to rising costs. The newly opened Meliá Trinidad Península Hotel began operations in early 2024, contributing to income, but performed below budget due to weak tourist inflows. Overall, the hotel assets saw meaningful valuation haircuts, with the average fair value per room across the Miramar hotels dropping from US$104k to US$87k.
On the capital structure side, CEIBA successfully renegotiated the repayment profile of its €25m convertible bonds, replacing the 2026 bullet maturity with five equal annual instalments from 2025 to 2029, providing some breathing room.
No dividend was paid during 2024 and the board has committed not to resume payments until the bonds have been fully repaid.
Despite the operational stability of its assets, the company posted a net loss of US$28.6m, largely driven by valuation markdowns across the portfolio and a qualified audit opinion stemming from historical valuation errors. Management emphasised ongoing efforts to secure hard currency payments and adapt to Cuba’s evolving regulatory environment.
The board reaffirmed the long-term viability of the company but highlighted continued uncertainty due to the geopolitical backdrop and Cuba’s internal economic fragility. A viability assessment concluded that CEIBA should remain a going concern over the next three years, though further shocks could pressure that outlook.
[QD comment MR: It’s been another challenging year for CEIBA Investments, with persistent Cuban macro pressures compounding the impact of international politics. While asset operations remain relatively stable, particularly at the Miramar Trade Centre, valuations have taken a clear hit.
The reinstatement of Cuba’s SST designation and ongoing liquidity and inflation issues are clear challenges for the fund and ongoing wide discount to NAV – 74% at the time of writing according to figures from Morningstar – suggests the market has priced in a significant degree of scepticism.
That said, the renegotiation of CEIBA’s bond maturities is a welcome development, giving the company more flexibility at a time when hard currency repatriation remains unpredictable. The portfolio’s income-generating potential is still intact, but unlocking that value for shareholders may depend more on external factors than management execution.
Investors will want to see evidence of improved capital flows and tourism trends before any meaningful rerating can take place. Until then, patience and realism are likely to remain key.]
