PNB sells key London property
Asset manager to get good return from its RM760mil investment
KUALA LUMPUR: Governmentlinked asset manager Permodalan Nasional Bhd (PNB) has sold one of its key London properties, a commercial building called 90 High Holborn, for an undisclosed sum, driven in part by an impending rise in capital gains tax in Britain.
The sale also follows the trend of Malaysian government entities unloading British properties over the last few years. PNB will be reinvesting proceeds from the sale into its global property portfolio.
The sale comes at a time when the ringgit has strengthened and British properties are deemed to be at low prices in light of Brexit.
But PNB’s group chief executive officer Datuk Abdul Rahman Ahmad explained that the asset manager would enjoy a good return from its investment in this property, which was acquired in 2012 at a price of £140mil (RM760mil).
“We are very happy with the deal, as it would generate a strong return from a capital and foreign exchange view. The proceeds will be reinvested into our global asset portfolio.
“We are still in the confidentiality disclosure period and as such are not able to provide you additional information. T
he buyer has requested for confidentiality for a certain period, and as soon as possible, we will provide all details on this divestment,” he said at a press conference following the release of PNB’s 2017 annual report.
PNB chairman Tan Sri Abdul Wahid Omar said the property was sold at “a good yield” and the proceeds from the sale would be reinvested in global property assets.
“London continues to be a good market, and has new changes to its tax laws, making it lucrative for foreign investors who want to divest their properties there.
“We are doing a comprehensive review and assessment of investment opportunities before we make any decisions,” he added.
Currently, PNB and the Employees Provident Fund are in negotiations to purchase commercial assets in the second phase of the Battersea power station development worth £1.61bil.
In the wake of Brexit, the British government plans to introduce a capital gains tax on foreign buyers of commercial property. This will come into effect in April 2019.
The sale of 90 High Holborn would be the first sale of the five real estate investments the asset manager owns in London.
Abdul Rahman said that these five properties today had a current market value of around £1bil (RM5.4bil). PNB owns Milton and Shire Houses, One Exchange Square, PNB House and Aviation House.
Last year, news reports in Britain indicated that 90 High Holborn could fetch prices of around £190mil, reflecting a yield of 4.5%.
Meanwhile, PNB has also declared a dividend of 6.75 sen per unit for Amanah Saham Bumiputera (ASB 2) and 6.25 sen per unit for Amanah Saham Malaysia (ASM) for the financial year ending March 31, 2018 (FY18).
The payout for ASB 2 and ASM is RM562.9mil and RM1.1bil, respectively.
PNB has also declared the income distribution of all three funds under the Amanah Saham Gemilang – 4.8 sen for AGS-Pendidikan, 5.2 sen for ASG-Kesihatan and 5.15 sen for ASG-Persaraan.
The total income distribution for these five funds amount to RM1.88bil.
PNB has also distributed dividends and bonuses totalling RM14.6bil for FY17, bringing the cumulative dividends paid out since its inception to RM172.1bil.
Moving forward, PNB plans to reduce its cash and money market allocation of 18.3% as of February this year, with plans to reinvest and increase private investments to 5% from 2% this year.