PERMODALAN Nasional Bhd (PNB) is starting to monetise its maturing foreign investments and aims to reinvest the proceeds in global markets.
One of Malaysia’s leading asset managers, PNB recently divested its interest in 90 High Holborn, a landmark office building located in London.
The sale was confirmed by PNB group chairman Tan Sri Abdul Wahid Omar to have had taken place on March 28 this year.
However, details of the sale could not be disclosed as it was still in “confidential period”, Wahid told reporters after PNB’s 2017 annual report briefing here recently.
The sale of 90 High Holborn comes three months after PNB sold Santos Place in Brisbane, the third most populous city in Australia, for A$370 million (RM1.14 billion).
Santos Place was acquired by Singapore government sovereign wealth fund GIC, which has an estimated US$359 billion in assets under management. The transaction was the largest office deal in Brisbane last year, despite the high vacancy rates in the central business district.
The selling price, however, was said to be about 7.5 per cent lower than the price PNB had expected to get for the property.
The deal was done through ASX-listed property fund manager Charter Hall Group and represents an investment yield of 5.7 per cent.
HOLDING ON TO SANTOS PLACE
Malaysian fund managers opined that had PNB waited another year to sell Santos Place, the fund manager would have made more gains from the disposal.
“The office rental market in Brisbane is picking up. This means demand for Grade A office buildings is improving, both for sale and lease. The city is being reshaped by over A$12 billion of major infrastructure projects. This is expected to drive strong interest in commercial properties.
“I don’t think PNB was in a hurry to dispose of the property. It just felt the price was right and decided to sell and make a quick gain to re-invest in other assets that it might find suitable for investment, whether in Malaysia, Australia, or other foreign countries,” a fund manager told NST Property.
A recent report by the Urban Land Institute and PricewaterhouseCoopers found that among secondary markets in Australia, Brisbane and other areas along the Gold Coast likely have the best prospects as an investment destination, due to improving fundamentals after a year-long slump — effective rents are projected to grow 16 per cent in the year to 2018. When Santos Place was put in the market it had attracted a high level of interest from domestic and international investors.
Completed in 2009, the 35,395 square metre tower houses the headquarters of Australian oil and gas producer Santos. The certified green building overlooks the Brisbane River near City Hall, within the core business district of the Queensland state capital.
The 41-storey Santos Place is PNB’s first foreign foray. It acquired the Premium Grade A building for A$290 million in August 2010 from Nilson Properties.
PNB president and group chief executive officer Datuk Abdul Rahman Ahmad, at the 2017 annual report briefing, said the group was looking to build on its property portfolio of global assets and not just in the United Kingdom.
SELLING LONDON ASSETS
Abdul Wahid said when PNB invests in properties, it will also look at opportunities to exit when the market improves.
“In the case of 90 High Holborn, we have a buyer that is willing to pay an attractive price for the asset. So we have decided to sell that property at a good yield, generating both gains and cash that we can use to invest in Battersea, for example,” he said.
The 90 High Holborn property is a 217,654 sq ft office building that was completed in 2002.
PNB bought the building, together with One Exchange Square from German fund manager KanAm, for £550 million (RM2.6 billion) in 2012.
The two buildings, which have single tenancies, have been generating good yields for PNB. 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 also acquired the 453,474 sq ft 12-storey Milton & Shire House on 1 Silk Street for £350 million from American investor Beacon Capital in 2012, and a nine-storey Grade A office block on 25 Basinghall Street for £270 million from Irish development and investment firm, D2.
In 2014, it was reported that PNB had acquired an office building known as 77 Queen Victoria Street, in central London for around £26 million.
Last year PNB was reported to be looking to sell 90 High Holborn and Milton & Shire House for a combined £590 million.
The group launched for sale 90 High Holborn through CBRE in September 2017 for £190 million, and Milton & Shire House for £400 million, via Knight Frank.
It had invited agents to pitch a strategy for the two assets — either to sell the buildings, refurbish them or continue to hold and manage the assets.
Milton & Shire House has been let for further nine years to Linklaters, generating an income of £18 million per year for PNB.
In November 2017, there were reports saying that PNB had withdrawn the sale of 90 High Holborn, opting instead to sell Milton & Shire House.
It is unclear why PNB decided to sell 90 High Holborn and whether Milton & Shire House will also be disposed of soon.
It is understood, PNB’s other major assets, One Exchange Square, Aviation House, Kingsway and PNB House are not currently being considered for sale.
PNB’s assets in the UK also include a 40 per cent stake in Battersea Power Station development.