News & Events

[ 10-01-2013 ]
EPF, PNB may be bidding for London's Chiswick Park

PETALING JAYA: Malaysia's stake in the much sought-after commercial property segment of London is set to increase, it would seem.

The Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB), said a source, could be involved in a deal poised to become the UK's biggest since the advent of the European crisis in the form of possible ownership of London office campus Chiswick Park.

The source said the two usual suspects were likely to be in intense competition with Chinese and South Korean wealth funds, as they are the two biggest funds in the country which are already investing in UK properties.

Khazanah Nasional Bhd, Retirement Fund Inc (KWAP) and Sime Darby Bhd could also be involved, but I don't think it is likely,” he said, noting that Sime Darby was already involved in the massive Battersea redevelopment. Malaysia hogged international limelight last year after a consortium comprising Sime Darby, SP Setia Bhd and the EPF acquired London's iconic Battersea Power Station for £400mil or RM1.97bil.

However, another source close to the matter has implied that Khazanah has no interest in the deal.

As for whether Malaysian funds stood a chance against China and South Korea, he said “every contender has an equal chance”.

“It is just a matter of what they are bidding for and what they can offer. Whoever has the best offer and terms will win the bid, as this is a level-playing field,” he reiterated, adding that the Malaysian government-backed funds already made a credible party.

It was reported in a foreign financial daily that China Investment Corp (CIC) as well as government-backed funds from South Korea and Malaysia had submitted their bids to own the campus.

It was also in the news that CIC was working with a third-party investor.

The 1.1-million-sq-ft office campus, fully developed by the US private equity firm Blackstone since its acquisition more than 1 years ago, has ten fully let-out buildings.

On whether Blackstone would seek more bidders for the office campus, he said it was possible and that it would probably be Middle Eastern investors.

With a target price of £757mil, Chiswick Park's initial yield of 6% would be reasonable as most of London's commercial property yield is around the 5% mark.

“It is a well-established freehold land with all buildings renting. There is a lot of value added,” the source said.

This latest deal is a continuing trend of investment from Malaysia's private and government-linked organisations that have flocked to prime Central London since 2009.

As of September 2012, investments from these sovereign funds and government-linked companies have exceeded £3.5bil.

Besides the Battersea redevelopment, the latest property deal in the UK involving Malaysia was by Lembaga Tabung Haji, which bought 10, Queen Street Place for £165mil from Jaguar Capital. The property has an annual yield of 5%. The deal was completed in the middle of last September.

If the deal goes through at £800mil as sought by Blackstone, Chiswick Park would give the strongest returns in European real estate in the shortest period since the eurozone crisis.

CBRE Ltd, the advisor on the deal to Blackstone, did not want to comment at press time. Halpern PR, which assists Blackstone on communication matters, wasn't available also.