Friday, May 30, 2014

Mongolia Growth Group aquires central retail center

MGG Press Release:

Mongolia Growth Group Ltd. (“MGG”) or (“the Company”), a real estate investment and development company participating in the dynamic growth of the Mongolian economy via ownership of institutional-quality commercial property assets in Ulaanbaatar, Mongolia, announces the acquisition of a centrally located retail center along with an adjoining development site in two separate transactions.

The total cost of the two transactions is approximately CDN $8,300,000 consisting of approximately CDN $5,950,000 in cash and the transfer of MGG’s two largest “held for sale” assets along with one of its development sites. It is expected that this transaction will be accretive to cash flow beginning in early 2015, as the three assets transferred in this transaction produced negligible operating income over the past year. MGG is currently finalizing plans to modernize and expand the recently acquired building structure and development site into a bustling retail shopping center.

 “From a strategic and operational standpoint, it is substantially easier to manage one larger asset, compared to three smaller ones,” said Paul Byrne, CEO of MGG. “This transaction continues our process of disposing of smaller and marginal assets while we upgrade our portfolio into high quality assets in prime locations. In the case of this asset, we have the potential to achieve accretive cash flows while we await the full blue-sky development potential of the site.

This appears to be one of the first actions new CEO Paul Byrne has taken. The company is exchanging properties that are producing little income for a location in the center of UB that will be rehabbed and begin contributing to MGG's cashflow. In previous interviews Mr. Byrne has stated that there is ten years work redeveloping Ulaan Baatar's downtown. I like the move and look forward to more news as Mr. Byrne brings his extensive real estate experience to our company.

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