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Friday, October 26, 2012

PNB planning more property purchases in major cities

KUALA LUMPUR: Permodalan Nasional Bhd (PNB), Malaysia's biggest fund manager, is planning to buy more prime commercial properties in major cities.

"We are also looking at other markets. We can't say where we are going to invest next as this could prop up prices but we will make an announcement when it is a done deal," said its chief executive officer Tan Sri Hamad Kama Piah Che Othman.

Hamad was speaking on the sidelines of the signing of memoranda of understanding between Tun Ismail Mohamed Ali Foundation (YTI), a foundation set up by PNB to promote tertiary and professional education, and two local universities to enhance academic excellence.

He was responding to a question of whether PNB is looking to buy more prime office space in London, where it has gone on a buying spree in the past year.

So far, the state-owned fund manager has sunk in more than RM5 billion there.

Its first investment in London was in December 2011 when it bought a 12-storey office space in Milton & Shire House on 1 Silk Street for STG350 million (RM1.72 billion) from American investor Beacon Capital.

In January, it bought Woolgate Exchange on 25 Basinghall Street, a nine-storey commercial office with a basement floor, for STG270 million from Irish development and investment company D2.

Two months later, PNB bought two more office buildings - 90 High Holborn and One Exchange Square - from German fund manager KanAm for STG550 million.

One Exchange Square is tenanted by the European Bank for Reconstruction and Development, a quasi-public organisation, while 90 High Holborn is the headquarters of law firm Olswang.

PNB's first foreign foray was back in August 2010 when it bought Santos Place in Brisbane, Australia, for A$290 million (RM916.4 million) from Nilson Properties.

The 37-storey building has 373,508 sq ft of lettable space with about two-thirds of that leased to Santos, an Australian oil and gas giant.

By Business Times

Bolton unit buys land for RM4.4mil

PETALING JAYA: Bolton Land Sdn Bhd, a wholly-owned subsidiary of Bolton Bhd, has purchased two parcels of freehold development land off Jalan Segambut, Mont’Kiara in Kuala Lumpur for RM4.4mil.

In a filing with Bursa Malaysia yesterday, Bolton said its unit has entered into a conditional share sale agreement for the proposed acquisition of 1,000 ordinary shares of RM1 each.

representing the entire equity interest in Seni Buluh Sdn Bhd.

“The proposed development of the land would consist of high-rise mixed commercial and residential development, with estimated gross development value and gross development cost of approximately RM250mil and RM200mil respectively,” it said.

By The Star

Interesting times ahead for Malaysia's REITs industry

SINGAPORE: There are interesting times ahead for Malaysian Real Estate Investment Trusts (M-REITs) which is also set to attract new players to the market.

Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng said with the success of the listing of M-REITs and the performance track record (total return), the industry will continue to attract new players to it.

“We wish to see the entry of REIT players that are backed by size, good quality assets and reputable promoters to grow M-REITs to the top three REITs market in the region. “Currently, the top three REITs markets in terms of market capitalisation in Asia are Japan, Singapore and Hong Kong,” he told Bernama.

When asked how he rated the local industry at present and challenges faced by players like Sunway REIT, Ng pointed out that the M-REIT industry is currently in the growth phase.

“It continues to attract the entry of not only new but large and quality REIT players as evident from the listing of Pavilion REIT and IGB REIT from the end of last year to date. The market capitalisation of M-REIT stood at RM19.3bil as at Sept 30.

“This however, is relatively small, in comparison to the Singapore REIT market,” he said. Ng noted that there were many property companies planning for REITs and this augurs well for the M-REIT industry in the future.

“One key challenge is competition. We believe that competition is inevitable and the best approach in managing this is through clearly defined growth strategies with good execution.

“We will continue to implement our growth strategies in order to maintain market dominance in M-REITs. Certain sub-sectors of the property market are heading towards more intense competition and over time, it is a survival of the fittest,” he said.

As more REITs enter the market, Ng said acquiring new assets with earnings accretive will naturally become more difficult by virtue of the compressed yields.

Touching on existing policies, he said the Securities Commission, Bursa Malaysia and the Ministry of Finance have been extremely supportive of the development and growth of M-REITs industry.

“The prevailing regulations are accommodative for expansion of the M-REITs industry. For instance, the permitted gearing limit for M-REITs is up to a maximum level of 50%.

“In our opinion, the permissible gearing limit is supportive of growth compared to a country like Sinagpore, where the gearing limit is set at 30% (without rating from credit rating agencies).

“The authorities may consider adopting Singapore's policy in allowing gearing levels to reach a maximum of 60% backed by rating from credit rating agencies,” Ng said. - Bernama

“For larger REITs, the additional 10% gearing limit is meaningful for acquisitions,” he added.

By Bernama