EWI Capital Bhd president and CEO Datuk Teow Leong Seng
KUALA LUMPUR: EWI Capital Bhd (formerly Eco World International Bhd
), through its wholly-owned subsidiary EWI Investment Holdings Ltd, has committed A$100mil as an anchor investor in TrustCapital Australian Office Fund No. 3 (Fund) as it shifts towards investment holding.
In a statement, EWI Capital said the fund, managed by TrustCapital Advisors Investment Management Pte Ltd (TCA), is set up to invest in prime office assets across identified Australian capital cities.
TCA is a Singapore-based investment and advisory firm with a strong track record in the acquisition, management and divestment of Australian office assets.
The Fund aims to raise up to A$500 mil in equity, including EWI Capital’s A$100 mil commitment and contributions from other investors, to invest in prime commercial office assets across Sydney, Melbourne, Canberra, Brisbane, and Perth.
It has a tenure of eight years, with an option to extend for up to two more years, and targets an internal rate of return (IRR) of about 10% per annum over its term.
“EWI Capital has been actively exploring strategic investment and development opportunities that can generate nearer-term income for the Group,” it said, adding that its participation as the anchor investor in the Fund marks an important step in this direction.
“This investment will provide EWI Capital with direct exposure to Australia’s prime office market, which currently offers stable and attractive rental yields with potential upside from capital appreciation of the underlying property assets,” EWI Capital said.
To reflect its strategic shift towards property investment, EWI Capital is carrying out an internal restructuring that includes renaming its wholly owned subsidiary EWI Marketing Sdn Bhd to EWI Management Sdn Bhd (EWIM).
The name change highlights the group’s new focus on identifying, acquiring, managing, and optimising its portfolio of investment assets.
EWI Capital president and CEO Datuk Teow Leong Seng said the Australian office sector currently offers attractive investment opportunities, supported by improved financing conditions, stabilised yields, and solid market fundamentals.
He said Australia is a market the group knows well, and TCA is a fund manager with a proven track record in identifying, managing, and delivering solid returns on Australian office assets, as demonstrated by its strong performance with Australian Office Fund No. 1 and No. 2.
“By partnering with TCA as an anchor investor of the Fund, we will be able to gain valuable property investment insights. At the Group level, we will also be able to contribute our extensive expertise and years of experience in both Sydney and Melbourne to enhance the decision-making process. This will set us in good stead going forward to be able to independently evaluate and select good direct investment opportunities in the prime Australian office sector, should the opportunity arise,” Teow said.
“Prime office assets in Australia currently yield approximately 6% to 8% annually, with some available at prices below their replacement costs. With the use of gearing, we are targeting annual cash returns above these rental yields and we are confident of achieving overall returns in excess of our base target IRR of 10%,” he added.
He also highlighted that office asset values are closely correlated with interest rates. “Easing inflationary pressures have allowed the Reserve Bank of Australia to reduce the cash rate from its peak of 4.35% p.a. to 3.60% p.a.. We believe there is potential for further rate cuts in the medium term, which could provide additional upside through capital appreciation.”
From an accounting standpoint, Teow said EWI Capital’s strategic shift towards property investment holding will accelerate income recognition, as rental revenue can be recognised once the fund completes the acquisition of an identified office asset. He added that this is expected to strengthen the group’s financial performance going forward.
“As a group, we are also in the process of assessing the current market value of our existing property portfolio, including the need for any impairments in order to immediately realise the value of the sites. This is with the aim of evaluating which sites should be sold to raise capital for reinvestment and which may be retained for development.
