GK Pension Fund to develop $1.8b supercentre for FosRich
GraceKennedy Pension Fund, GKPF, has struck a new deal FosRich Company under which property owned by the pension fund at 76 Molynes Road in Kingston is to be further developed into a five-storey supercentre that will also double as new headquarters...
GraceKennedy Pension Fund, GKPF, has struck a new deal FosRich Company under which property owned by the pension fund at 76 Molynes Road in Kingston is to be further developed into a five-storey supercentre that will also double as new headquarters for the electrical and lighting products trader.
GKPF will develop the site at a cost of $1.8 billion and hand over the structure to FosRich, which will customise it for its own purpose.
FosRich already operates a newly completed $200-million warehouse at the site under lease to the pension fund.
It will also hold a 20-year renewable lease for the supercentre, the construction of which is to be launched on November 16.
managing Director of FosRich Company Limited Cecil Foster said in an interview with the Financial Gleaner that while his company is leasing the entire structure, not all of it would be utilised by his operation. FosRich plans to sub-let portions of the building to other businesses, he said.
The $1.8 billion of financing for the development was arranged by Proven Group Limited, which also manages the assets of GKPF.
Of the five storeys, one will be underground and utilised for parking.
Foster said the superstore, which will operate on two levels above the underground garage, would allow FosRich to fully diversify into building fixtures and finishes such as tiles, windows, doors, kitchen and bath wares and some appliances.
“With the supercentre ... we won’t do cement, sand and stone, blocks, steel and lumber. But everything else to make that house or building complete, we’ll have it,” Foster said.
Of the four levels above ground, the first will house FosRich Electrical Superstore; level two will be partially taken up by administrative offices for the electrical superstore, while six stores will be rented out to other businesses; the third level will be rented out as BPO or business process outsourcing space and level four will become FosRich’s new corporate headquarters.
The company currently operates from 77-79 Molynes Road, which doubles as its headquarters and showrooms.
Foster said a decision would be taken later on what to do with those premises, but said it was likely be utilised as BPO space and/or showrooms for heavy, industrial-grade items.
The company founded by Foster and his wife Marion three decades ago has been on a rapid growth track since it went public and listed on the Jamaica Stock Exchange in 2017. FosRich added manufacturing of PVC pipes and fittings to its lighting operation, starting in 2018, followed by transformer repairs and the distribution of inverters for solar systems. The transformer repair and production of heavy-duty PVC pipes and fitting fall under a new company called Blue Emerald, which is contracted to provide the services to FosRich. Blue Emerald is owned by directors in common with FosRich and classified as an associate company.
Over nine months ending September, top line revenue blazed to $2.6 billion, up from $1.7 billion in the comparative 2020 period. Profit for the respective periods climbed to $388 million from $209 million.
The revenue boost was said to have come from increased sales in 11 of the company’s 12 product lines. The laggard was said to be electrical panels.
Foster said new product categories would be added to the portfolio once the superstore is up and running.
FosRich will spend $180 million of its own funds to customise and outfit the store, he said.
The new supercentre is being erected at the spot that once housed a 20,000 square feet building, which formerly housed a beer and soft drink distribution business called The Hub. The structure will be demolished and the site excavated to facilitate the construction of the underground garage.
The new building will span 13,360 square metres. The newly completed warehouse incorporates storage space and two loading bays spanning 2,635 square metres.
The terms of the lease arrangements between FosRich and GKPF were not disclosed.