EPF and PNB to buy commercial properties in Battersea project for RM8.35 billion

SETIA ALAM: The Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) have sealed a deal to buy commercial properties in Phase 2 of the Battersea Power Station project in London for RM8.35 billion (£1.583 billion).

On Friday, Battersea Phase 2 Holding Company Ltd (BP2HCL) inked the sale of Phase 2 of Battersea Power station commercial property to PNB-Kwasa International 2 Limited, a joint venture company formed by PNB and EPF to undertake the acquisition, concluding negotiations which began in January 2018.

Battersea Project Holding Company Limited (BPHCL) is owned by a consortium of shareholders namely S P Setia Berhad (40 per cent), Sime Darby Property Berhad (40 per cent) and EPF (20 per cent). PNB has a 65 per cent stake in the SPV, while the remaining 35 per cent is held by the EPF.

EPF deputy chief executive officer (Investment) Datuk Mohamad Nasir Ab Latif said EPF is committed to seeing through the completion of the Battersea project.

“As an integrated development backed by strong tenants, we are confident in the potential of the Phase 2 Commercial Property to yield sustainable and long term rental income for the EPF.

“We also anticipate the development to benefit from the extension of the London Underground Northern Line, which will provide greater accessibility to rejuvenate the area into a vibrant business and lifestyle epicentre,” he said in a joint statement with PNB today.

PNB president & group chief executive Datuk Abdul Rahman Ahmad said the extensive due diligence undertaken to evaluate the acquisition involved multiple advisers and technical experts, and PNB is satisfied that the proposed acquisition fits the investment strategy of both PNB and EPF.

“The acquisition enables PNB to consolidate our strategic ownership in this iconic and prime central London development which is expected to deliver a sustainable income stream and potential capital appreciation in the future,” he added.

Under the terms of the acquisition, PNB-Kwasa International 2 Limited is given a minimum guaranteed yield by Battersea Power Stations (BPS) throughout the construction period and up to five years post-completion with a price adjustment mechanism to account for any difference in actual rental income compared to forecast.

PNB and EPF said the terms will ensure downside protection for PNB and EPF whilst enabling the seller to earn-out upside in the development should the actual rental income perform better than expected.

“We are pleased with the sale of the Phase 2 commercial assets. It will bode well with our business plans as we continue to play a major role in the overall development of this iconic project. SP Setia is fully committed and positive on the long-term prospects of the project,” said SP Setia Bhd president and chief executive officer Datuk Khor Chap Jen.

“This is an important milestone in the development of the Battersea Power Station site, and it is a strong sign of confidence in the long-term success of this global property icon. We are pleased to have secured this commitment from two of Malaysia’s leading institutions,” added Sime Darby Property group managing director Amrin Awaluddin.

The transaction is expected to be completed in the first quarter of 2019.

London-based Battersea Power Station Development Company (BPSDC) will continue to manage the project, whilst subsidiaries of BPSDC Battersea Power Station Asset Management Ltd and Battersea Power Station Estate Management Ltd will be appointed as the asset manager and property manager after practical completion of the Power Station building for an initial term of 10 years.

The 42-acre Battersea Power Station site is being developed over seven phases since 2012, managed by BPSDC on behalf of the shareholders. It completed and delivered 867 residential units in Phase 1 over the past two years (2017-2018).

The first phase of the wider redevelopment, Circus West Village, is open with more than a thousand residents and almost two million people having visited the variety of independent restaurants, shops, bars and leisure facilities.

There has been considerable progress on the development of the Battersea Power Station building which is due for completion in late 2020 and opening to the public in 2021.

More than half of the one million square feet of commercial space available in the Power Station building has been let as office space to Apple for their new London Campus and No18, a business members club owned by IWG.

The retail and leisure spaces were launched earlier this year, and strong interest has been seen from a wide-ranging collection of UK and international brands.

Source: NST