Pilgrim fund to reap profit from the RM1.6bil deal
LEMBAGA Tabung Haji (LTH) is believed to have sold one of its prime properties in central London, heeding to a call by the Government to repatriate profits from overseas and support the domestic economy.
The sale of the office block in London, said to be worth £250mil (RM1.6bil), will net the pilgrimage fund a handsome profit.
The property, known as 151 Buckingham Palace Road, was acquired by LTH in March 2013 for £205mil.
At that time, 151 Buckingham Palace Road was occupied by the Department of Health and its regulatory agency.
Based on the prevailing exchange rate at the time, the deal was priced at RM1bil.
For LTH, the sale came at an opportune time as the pound sterling had risen 42% against the ringgit in the past two years.
“The transaction was an opportunity for LTH to reap a good profit from its recent investment,” a source says.
LTH had pledged in September to bring back RM1bil from overseas in support of a call by Prime Minister Datuk Seri Najib Tun Razak in September encouraging local companies to repatriate their profits back home.
This is one of a series of measures intended to shore up the falling ringgit and boost domestic investment.
Meanwhile, a property website reported that the office block was sold by LTH to a consortium led by GAW Capital, a Hong Kong-based property investment fund.
The deal with LTH involved an interlinked office block known as 123 Buckingham Palace Road from another owner.
The deal, which was completed earlier this week, was valued at £500mil (RM3.2bil).
LTH owns at least three prime commercial properties in London which include London 10 Queen Street Place, London Unilever House, Leatherhead in Surrey, London. The sale could be part of LTH’s strategic asset allocation review, which a RM60bil fund undertakes every three years.
LTH chief executive officer Tan Sri Ismee Ismail was quoted in July saying that 20% of LTH’s funds are allocated for property investments.
Apart from the UK, other property investments include those in Saudi Arabia.
One of its recent acquisitions at home is a plot of land in the Tun Razak Exchange project, where LTH purchased a 0.64ha land for RM188mil in April to develop a residential tower.
While the fund is seen as pulling out some money from the UK property market, it may be shifting its attention to the Australian market.
TH Properties Sdn Bhd chairman Datuk Azizan Abdul Rahman was quoted as saying that the company has allocated about RM220mil for all its Australian projects.
TH Properties is the pilgrim funds’ property arm.
Azizan said TH Properties had already obtained approvals from the relevant authorities for these next developments.
It has also embarked on further developments in Sydney with a gross development value (GDV) exceeding A$800mil (RM2.4bil).
It had just completed the A$220mil (RM678mil) Bay Pavilions property development located at Burns Bay Road, Lane Cove, 10km from the Sydney Central Business District (CBD).
Launched in late 2013 and sold out, the Bay Pavilions was completed ahead of time.
The inflow of funds is also seen as support for the weak ringgit, which has been reeling from a surge hot money flowing out of the local stock and bonds markets.
Retirement Fund Inc also said it is in the midst of selling one of its properties overseas and is planning to reinvest proceeds from the disposal at home.
The fund is also refinancing its foreign properties to take advantage of the low interest rates environment, where it would gain some RM2bil.
Meanwhile, pension fund Employees Provident Fund (EPF) is said to be considering selling its UK assets it bought in 2011 for a £155mil (RM1bil) price tag.
Reading International Business Park currently houses the European headquarters of US telecommunications company Verizon UK Ltd.
In April, EPF sold One Sheldon Square office building in Paddington, London for £210mil.
Aside from the UK, the fund also owns significant real estate in Germany, France, Australia and Japan.