EPF buys RM1.1b in assets in the UK

The Edge reports that although the purchases may raise some eyebrows, the EPF says these properties are generating strong cash flows.

KUALA LUMPUR: The Employees Provident Fund (EPF) has bought industrial and logistics assets worth about RM1.1billion in the United Kingdom.

The Edge Financial Daily reports that the EPF bought these properties from IM Properties plc, one of the largest British privately owned property groups in the UK.

In an email response to The Edge yesterday, the EPF confirmed that it was buying properties in the UK.

“I can confirm that we purchased a portfolio of industrial and logistics assets from IM Properties for close to £200 million, and these assets are at good locations and generating strong cash flows,” an EPF spokesman said.

The Edge quoted The Telegraph as saying that the portfolio acquired by the EPF was the largest sold in the Midlands, an area spanning central England with Birmingham as its largest city.

“The portfolio, according to the British newspaper, comprises 18 separate assets in business parks and industrial estates stretching from Heathrow to Birmingham.”

The Telegraph reported that the EPF was keen to move into the UK’s industrial properties sector, as the rise in Internet retailing has caused a boom in demand for warehouse space.

The report said the purchase of foreign assets might raise some eyebrows at a time when the ringgit has depreciated substantially. It pointed out that the EPF sold the One Sheldon Square at Paddington Central, London, to British Land Co plc for £210 million in April last year. The property was acquired by the EPF in 2010.

That money would have come in handy in the purchase of these properties.

Besides the UK, the EPF also has real estate investments in Germany, France, Australia and Japan, the report said.

“In 2015, the real estate and infrastructure asset class contributed RM1.7 billion in investment income, up 22.2% from 2014.

This asset class — which includes foreign investments and was initiated in 2010 — reportedly accounts for about 4% of the EPF’s total earnings, while making up 3% of its total assets.”