EPF sells UK office building to Chinese Estates for RM980mil

PETALING JAYA: The Employees Provident Fund (EPF) has divested a British office asset for Pound 175mil (RM980mil), reflecting an initial yield of 4.5%, and just outside the range it was hoping for, two sources from London confirmed.

The buyer is Chinese Estates, which led a pack of three Asian investors to buy the trophy asset.

London’s Savills Investment Management acted on behalf of the EPF, while property consultancy CBRE advised Hong Kong-based Chinese Estates.

The EPF bought the six-storey Georgian office building, 11-12 St James Square, West End, SW1, for Pound 147.5mil in 2011, which was then reflecting a yield of 5.4%.

In February, The Star, quoting two sources, reported that the EPF was hoping to sell the 80,000-sq-ft 11-12 St James Square for between Pound 180mil and Pound 204.75mil.

The EPF had put the office property for sale in January.

At about the same time, it also put on sale Tower Bridge House, E1, at St Katharine Docks for sale, and according to sources then, it was seeking about Pound 200mil for Tower Bridge House, reflecting a net initial yield of 4.75%.

It had bought Tower Bridge House in 2011 for Pound 163mil.

Britain-based CoStar, which tracks commercial property transactions, said in an email, Tower Bridge has not been sold yet.

The EPF is still talking to investors and has not called for bids yet, so the process is a lot further behind that of St James Square.

Besides these two buildings which were put on sale in January 2017, the EPF also put on sale last year office building Whitefriars, which is the headquarters of law firm Freshfields, for around Pound 155mil.

Hong Kong-based private equity firm Joint Treasure last year agreed to buy Whitefriars, but the deal did not materialise.

Joint Treasure subsequently bought freehold No 3 St James Square for close to Pound 133mil in the same area where the EPF’s trophy asset is located.

The St James Square area is considered a prime location for hedge funds and financial services, while Tower Bridge House is in one of London’s industrialised areas.

In February, when StarBiz broke the news that the EPF was divesting its assets in Britain, the EPF denied that the decision to sell was linked to the call by the Government for government-linked investment funds to liquidate their foreign assets and bring the money back to help strengthen the ringgit.

The EPF told StarBiz its move to divest its properties in Britain was part of (its) investment strategy to maximise returns to its contributors.

We will sell the investments when the value of the properties is high and based on the market cycle.

The fund also stressed that it was bringing back the profits, while the capital would be redeployed for other investments.

Source: Malaysian Trades Union Congress