Medical Disposables buys warehouse from KPREIT
Tameka Gordon, Business Reporter
Kingston Properties Limited (KPREIT) has closed a $230-million sale of its Hagley Park Road warehouse to Medical Disposables & Supplies Limited (MDS), which will use the space to expand its own operations.
The 27,000-square-foot warehouse, located just metres away from MDS' own complex, sits on about an acre of land.
"This more than doubles the current capacity", for MDS, said General Manger Kurt Boothe, whose company disclosed that the purchase was made on January 6.
"MDS has purchased the property in keeping with the expansion plans of its post-IPO period," Boothe said, adding the medical supplies provider continues to experience growth throughout the organisation and is now maximising its operating capacity.
MDS' own facility is comprised of several buildings which causes some splintering of operations. The company intends to relocate to the newly acquired property and set up shop under one roof, Boothe said.
This will "lend itself to a more efficient, controlled and coordinated structure," he added. But he declined to say what plans the company had for its existing property, including whether it would be sold.
KPREIT's executive director, Fayval Williams, says the proceeds from the sale will be redeployed to other income-generating properties, but not necessarily the Westmoreland project.
The company recently partnered with CEMEX Jamaica Limited on a $700-million real estate development to construct 105 homes in Waterworks, Westmoreland.
While noting the unavailability of "decent warehouse space" in areas near to commercial centres such as Half-Way Tree, Williams said the Hagley Park warehouse remained occupied during the time KPREIT held it.
Over the five years, KPREIT realised annually returns of 13.2 per cent on the warehouse investment, inclusive of cash yield and capital appreciation, the company reported to the Jamaica Stock Exchange.
For MDS, which listed on the JSE Junior Exchange in December 2013, the acquisition "will afford the company the opportunity to expand operations, maintain long-term viability and increase shareholder value," says Boothe.
"MDS has realised approximately 280 per cent in cumulative revenue growth over the last five-year period. Consequently, the need for additional space has arisen to accommodate higher levels of inventory, more office accommodations, as well as the provision to facilitate further development projects," he said.
The company notched up annual sales of $913 million at yearend March 2014.