• Boston Pizza royalty fund draws praise from investment expert

VANCOUVER, British Columbia -- Greg Bay, the president of Vancouver-based Cypress Capital Management Ltd., has been selectively buying into a number of new issues in a wide variety of industries, including pizza.

According to the National Post, he likes Boston Pizza Royalties Income Fund (BPFun/TSX), which was listed in mid-July, and whose shares have sold for as high as $10.79 (U.S. $6.90). The IPO consisted of 7.69 million units at $10 (U.S. $6.40) each.

The trust was formed to allow Richmond, B.C.-based Boston Pizza, Inc. and its franchisees to share in the revenue of from its 156 Canadian locations. In 2001, the company's sales exceeded CAN $300 million (U.S. $192 million).

Nearly all the stores are franchised outlets and 4 percent of gross sales from each are paid to the trust. Those funds, Bay said, give franchisees necessary capital for construction, finance, marketing and training support.

Over the next few years, Boston Pizza it wants to add 45 new dine-in outlets in Eastern Canada and 23 in Western Canada. Since 1993, management has achieved annual revenue growth of more than 16 percent, which Bay called "a steady, good track record."

Bay also likes the fact that the trust is internally managed, and that the company's management holds a 20 percent stake. That, he said, ensures alignment with unit-holders' interests.

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