Real estate investment company Mongolian Mongolia Growth Group (MGG) released its April 2014 shareholder letter.
The letter said that in April 2014, MGG’s core commercial property portfolio experienced a same-store rental increase of 36.8 percent relative to April 2013 on properties owned 12 months or longer, as measured in MNT. Total billed revenue for April 2014 was 260.7 million MNT, as compared to 212.5 million MNT in April of 2013 or a 22.7 percent increase. The occupancy rate for the core portfolio in April of 2014 was 95.9 percent, including an occupancy rate of 98.1 percent for core retail properties and an occupancy rate of 90.5 percent for core office properties.
MMG said it is implementing a strategy of shifting MGG’s asset mix away from smaller properties that cost more to maintain and manage, and towards larger institutional-quality assets that are easier to scale. During April, MMG disposed of one property. Over the course of the first four months of 2014, they disposed of a total of seven properties and received commitments to sell an additional two properties.
In April, MGG borrowed money from a “highly respected” bank in Mongolia, in order to complete the acquisition of a distressed asset at a substantial discount to current market prices. “While property companies are usually significantly leveraged for better economics, we want MGG to retain a conservative balance sheet with ample liquidity to take advantage of future acquisition opportunities, like the purchase that was just completed. The company intends to reduce the borrowings through continued sales of non-core assets, while in due course, exploring ways to refinance this new loan with cheaper overseas borrowings,” the company said.
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