Thu | Dec 12, 2019

GK pension fund to develop, lease warehouse space to FosRich

Published:Wednesday | November 13, 2019 | 12:16 AMNeville Graham/ - Business Reporter
Cecil Foster, CEO of FosRich Company Limited.
Cecil Foster, CEO of FosRich Company Limited.

GraceKennedy Pension Scheme is to do its first real estate development at 76 Molynes Road, Kingston, under a deal with electrical lighting company FosRich, which will lease the facility for use as a distribution centre.

The pension fund plans to pursue lease arrangements with other companies, according to Chairman Douglas Orane.

FosRich is already a tenant at the property, but the warehouse to be developed at the site will be a new construction, which CEO Cecil Foster says is due to begin later this month.

By May 2020, FosRich plans to vacate the 15,000 square-foot warehouse it now occupies and move into a 30,000 square foot distribution centre, which will be built with headroom of 35 feet – providing stacking space around two to three storeys high.

FosRich needs additional storage space for more inventory, following its expansion into manufacturing in January, as a producer of PVC pipes.

The manufacturing plant, spanning 12,000 square feet, was built at FosRich’s Maverly Avenue complex as part of the company’s expansion programme, which Foster says is ongoing.

First Phase

“All I will say is that this is the first phase of some big plans that we will be talking about when the time is right,” he told the Financial Gleaner.

The GK pension fund, which is managed by Proven Wealth Limited, will develop the space as ‘fit for purpose’, specific to the needs of the lighting and manufacturing company; and lease the centre to FosRich, initially, for 25 years.

“This is a model that we think is good for business. It is a win-win because there is no upfront strain on our cash flows, while GK Pension Scheme has guaranteed flows,” Foster said.

The parties signed off on the agreement for FosRich to lease the centre to be built on November 5 at Proven Wealth’s offices; however, the contract details were not disclosed.

“The full details of the lease arrangement are still being worked out,” said Foster.

Other sources close to the deal say the initial investment being made by GK Pension in the development is close to $150 million.

“The GK Pension Scheme is being innovative, willing to create new real estate assets that are ideal for long-term ownership, with blue chip companies as tenants,” said Orane in a release about the lease agreement with FosRich.

“Alliance with commercial entities is a future avenue for the growth and development of the Scheme. This is an opportunity that other pension funds could explore to actively support the accelerated growth of the Jamaican economy,” the pension scheme chairman said.

Contacted for further comment, Orane affirmed to the Financial Gleaner that the pension fund is looking at similar arrangements for the future with other companies.

“The pension scheme is continuously looking for potential real estate investments, particularly in industrial and commercial properties, which would serve blue-chip industrial and commercial tenants,” Orane said from overseas.

FosRich’s new 30,000 square-foot distribution centre will add to its warehousing space that spans three urban centres.

The company will continue to utilise 60,000 square feet of its 180,000 square-foot Maverly Avenue facility for bulk warehousing and manufacturing and 15,000 square feet at its 77-79 Molynes Road base. Meanwhile, its Mandeville and Montego Bay facilities, each spanning 20,000 square feet, will operate as regional warehouses.

neville.graham@gleanerjm.com