How Safe (And How Good) Are PNB Investments?

The Thingy has written a pretty detailed report about PNB suddenly dumping buildings they bought in London just three years ago in 2014.  

They bought these properties when the London prices were at the highest. 

Now they are trying to sell the properties when the market in London has already peaked. 

It remains to be seen if PNB can find a buyer and for what price.

Here is The Thingy:

Finance Minister’s desperate scramble for money 

London buying spree of recent years thrown into crash reverse.

FELDA’s Kensington hotel sale 

PNB seeking buyers for two major properties bought in 2014.

purchases performed on prodding of Najib 

PNB obliged to borrow billion dollars to fund purchases

risky investment, rental income largely to pay borrowing costs

“..PNB in talks with seven banks, Bank of Tokyo-Mitsubishi UFJ, Mizuho Corporate Bank, OCBC Bank, Scotiabank, Standard Chartered Bank, Sumitomo Mitsui Banking Corp and UOB to arrange the facilities.  .   .     .     The first bridge entailed a StanChart-led facility, which will back the 350 million pound purchase of Milton Shire House on Silk Street, the current headquarters of law firm Linklaters, Basis Point added.  .    .     .     PNB to borrow 250 million pound  ..   ..   .  .    decided to get larger loan to buy two more London properties…[Reuters 2012]

So, what was the point?  

three years later PNB unbuttoning the whole expensive deal.

2014 terrible time to invest in London, price bubble 

2017 timing seems terrible for sale

PNB joins £10b pounds worth of property that come onto market 

Worst time to sell?

‘yield’ on buildings fairly miserable over the period

huge costs of acquiring and servicing loans.  

increased in potential value by only 4-5%

2014  PNB bought 3 buildings in London 

Shire House (£350m)

1 Exchange Square (£410m) 

90 High Holborn (£140m). 

Milton Shire House could fetch £360m, yield of 5.2%. 

Ninety High Holborn to be sold for £190m, 4.75% yield

why so much hurry to release this money at this unfortunate time?  

PM ultimate decision-maker over PNB 

So, what is Najib’s motive?

extremely large payment looming for 1MDB.

2nd $600m tranche of IPIC due end December 

1MDB doesn’t have cash. 

My comments :  I want to ask PNB : You are handling public funds. Three years ago when you spent billions and put billions of public funds at risk to buy these buildings that you are now dumping on the market (obviously in a hurry) what was the investment time frame that your risk analysis and investment analysis was looking at?  Certainly it must have been more than three years.

No one sells properties after only three years unless you are a reckless speculator. 

Didnt you tell your investors that you were buying these properties for long term investment gains? That is usually the nature of property investments  - to lock up long term assets for steady yields.  Now PNB is selling these buildings after only three years.

Someone must have made a big commission from arranging the purchase of those buildings. There must have been commission agents involved. 

Even 2% of say HALF BILLION POUNDS works out to 10 MILLION POUNDS or about RM55 Million !!

Now the sale of the buildings will generate another RM55 MILLION commissions again.

Dracula Masih Menjaga Tabung Darah.

The question is - who makes such investment decisions at PNB? 

Isnt there a professional investment committee or professional investment panel in PNB whose job it is to carefully evaluate all these investments?   You are playing with public funds. 

So how safe are the public's investments in PNB?

There is no more Tun Ismail Ali in PNB.

There is no more Khalid Ibrahim either. 

No more Hamad Kama Piah also.