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Thursday, August 2, 2012

Amcorp Properties in joint venture to invest in real estatein London

Amcorp Properties' Lexham Gardens in London

PETALING JAYA: Amcorp Properties Bhd is the latest to venture into the London property market. The company announced that it had entered into a joint venture (JV) to acquire a freehold property in London via wholly owned subsidiary Old Burlington Ltd (OBL) with NL (Pollen) Ltd and HPL (Mayfair) Pte Ltd.

The company's investment portion would amount to a maximum of £23.75mil (RM117.6mil).

OBL, together with NL and HPL, formed a JV company to acquire the property from Standard Life Assurance Ltd for £85mil.

The JV company, Ten Acre (Mayfair) Ltd, plans to redevelop the property for residential use. A further £5mil will be considered for the conversion of the property for that purpose. In a filing with Bursa Malaysia, Amcorp Properties said Ten Acre's major shareholder was HPL, with a stake of 65%, while OBL and NL would respectively hold a 25% and 10% stake.

The property is located east of Mayfair, which boasts as a prestigious retail and residential area in London. “The property comprises a mid-terraced, Mayfair office building totalling 83,024 sq ft of commercial accommodation over basement, ground and eight upper floor levels. The ground and basement comprised restaurant and gallery tenants with office accommodation on the upper floors,” said Amcorp Properties.

Ten Acre intends to acquire and manage the property in two stages. The first of which is to secure a high quality residential led scheme. The second stage will see the development, marketing and sale of the completed units at the property.

OBL's £23.75mil investment will be funded via advances from Amcorp Properties. “Amcorp Properties intends to finance its portion of the capital contributions via internally generated funds of Amcorp Properties and its subsidiaries,” the company told Bursa.

The building was constructed in the 1930s, and was subsequently refurbished in the 1980s.

Kenanga Investment Bank head of research Chan Ken Yew said Malaysian companies were taking advantage of the weakness in the pound, coupled with the trough cycle in the London property cycle. “Additionally, London's common law is similar to our common law. Therefore, it is easier to adopt their law as compared with other countries,” he said.

In its note to Bursa, Amcorp Properties said it intended to continue the expansion of its property portfolio in central London, based on its profitability in the London property market in recent years.

In late 2010, Amcorp Properties had acquired a residential property with 10 self-contained apartments in Lexham Gardens, London via its unit Riverich Ltd for £7.3mil. The company said the rental from the property provided a sustainable recurring income. According to the company's website, the rental yield for the property is about 4%.

In a separate note, adding to the foray of local investments into the United Kingdom, Malaysian consortium consisting of SP Setia Bhd, Sime Darby Bhd and the Employees Provident Fund officials recently announced plans to develop the Battersea Power Station for £8bil.

Lembaga Tabung Haji was also said to be finalising its first commercial property acquisition in London, estimated at £165mil. The proposed acquisition is expected to be completed in September.

It is also noteworthy that Genting Malaysia Bhd is investing £120mil to develop a leisure and entertainment complex in Birmingham.

Chan added the return on investment for companies investing in the UK property market arena will bank on the economic situation. “If the economic situation is good, companies will find that it is time to harvest their investments. Now, it is time to sow them,” Chan said.

Trading of Amcorp Properties' shares on Bursa was halted from 9am to 10am following the announcement on Wednesday. The share closed 0.5 sen up to 50.5 sen at 5pm yesterday.

By The Star

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