GK seeking anchor investors for commercial centre project
Published:Wednesday | January 22, 2014 | 12:00 AM
Avia Collinder, Business Reporter
GraceKennedy Limited is finalising talks with an overseas investor to partner on the development of a new commercial centre on lands being acquired from the Urban Development Corporation in downtown Kingston. GK Group CEO Don Wehby confirmed the negotiations and signalled that a deal was close.
He also told Wednesday Business that GraceKennedy was seeking up to "four anchor investors", but that GK would maintain a "significant" role in the project.
The commercial centre to be located in proximity to GK's headquarters in downtown Kingston is estimated at US$30 million to US$35 million (J$3.2 billion to J$3.7 billion). The complex will include approximately 400 high-rise parking spaces, offices and retail space; and will feature a gym and food court.
Wehby said the commercial centre is likely to be developed in phases with parking being the most urgent element.
Planning for the project is still in the preliminary phase and the use of the space to be developed, including sale of units and lease arrangements, is yet to be determined. But, it is likely that the head office of subsidiary GraceKennedy Money Services will be located from its uptown base, he said.
The company is seeking a project manager, architect, engineers and other professionals for the project.
"We expect to commence construction within 18 months of completion of the purchase of the land. This timeline is, of course, heavily dependent on the necessary regulatory approvals," Wehby told Wednesday Business.
largest Capex budget
He said GraceKennedy's allotment for capital development in 2014 is the largest it has ever been in the history of the company as it prepares to investment in technology, retooling and the commercial centre project. Its cash pool at last disclosure topped $5 billion.
The food and financial services conglomerate's last comparatively large capital project was its $2-billion warehousing and distribution hub in St Catherine.
The downtown property being acquired from UDC is approximately 48,000 square feet and encompasses a parking lot now in use by GraceKennedy at Harbour Street.
"Our plan is to establish a real estate investment trust (REIT), which we propose to list on the Jamaica Stock Exchange in due course, following completion of the project," said Wehby.
"It is our intention that the project will be a GraceKennedy-led and sponsored development."
Wehby declined to name the overseas party to the current talks until the deal is sealed. Typically, however, anchor investors are meant to imbue confidence in a project or business so that others will invest more willingly later. They are the first round of investors in an entity that is expected to go public.
The listing of the REIT to be created by GraceKennedy will open up opportunities for investor participation, Wehby said. He adds that GraceKennedy expects to pursue future projects under the REIT, all of which will be located in downtown Kingston.
"This is the first one. We will take it from there to see what other projects can be done," he said.