No Fire Sales For London Properties – PNB
We refer to an article with the title “Fire Sale in London Continues! PNB to Flog Half Billion PoundProperties” (“the Article”) that has been circulated via social media recently.
Permodalan Nasional Berhad (PNB) wishes to highlight that the Article contains numerous inaccuracies and would like to make the following clarifications:
1. The two properties in the United Kingdom that were referred to by the Article are Milton & Shire Houses located at 1 Silk Street, London EC2 and 90 High H+olborn located at London WC1. The acquisitions of these two properties were completed in the first quarter of 2012 and not in 2014 as alleged.
2. The purchases were made in line with PNB’s long term strategy of portfolio diversification and expansion into the global market and was undertaken at an attractive price given the favourable market condition and currency exchange prevailing at that time, with both assets having long term leases with reputable tenants.
3. The acquisitions were partly funded by debt of less than GBP370 million at a highly attractive interest rate of below 2%. This is similar structure to the financing of any property investment undertaken by most investment institutions as part of the strategy to enhance equity returns.
4. After holding properties for more than 5 years, PNB is exploring the possibility of divesting these properties in line with our investment strategy to prudently monetise our investment as they reach maturity and reinvest the proceeds for other investments. Further, this is also to take advantage of continuing strong demand for UK properties despite concerns over Brexit as reflected by more than GBP8 billion worth of properties already being
transacted for the first half year of 2017 (compared to GBP13.1 billion for the full year of 2016)*.
5. Based on existing market value of the properties, PNB currently stands to realise significant equity investment gains of more than 20% IRR per annum benefiting from the capital appreciation, effective financing structure and forex gain. Any proceeds received from the divestment shall be reinvested for other investments meeting PNB’s stringent criteria.
6. This strategy however is subject to PNB receiving offers that are attractive and meet our expectation. This is especially since PNB would be happy to retain the properties, given they continue to provide attractive cash dividend yield to PNB.
7. PNB was conceived in 1978 as a key instrument under the New Economic Policy (NEP) to increase the participation of Bumiputera in the country’s equity ownership. PNB continuously strives to support returns to its 13 million Malaysian unit holders. It is governed by rules, regulations and guidelines set by the authorities such as the Securities Commission and Companies Commission of Malaysia, among others.
8. PNB has a strong and successful track record of almost 40 years. It is an institution of trust, competency, prudence, honesty, integrity and professionalism. Any inferences that proceeds from the disposal of its UK properties would be used for any other reason than for the benefit of unit holders are completely false and malicious.
– Released by Permodalan Nasional Berhad