Monday, July 29, 2013

Malaysia pension fund to invest in German, French properties

KUALA LUMPUR - Malaysia’s state pension fund will invest half a billion euro in industrial property in Germany and office space in France, according to sources familiar with the deals, signalling growing appetite for high-yielding property assets as Europe’s main economies show signs of recovery.

The Employees Provident Fund the world’s sixth-largest pension pool with about $160 billion in assets, has been expanding its foreign portfolio as it seeks to maintain high dividends for Malaysian savers in the face of limited opportunities in the small Southeast Asian nation.
The EPF will expand an existing partnership with Australia’s Goodman Group Pty Ltd to start a 250 million euro fund to buy seven industrial properties in the German cities of Berlin, Munich and Frankfurt, the sources said.
The pension fund will spend another 250 million euros to buy prime office space in Paris and capitalize on high rental yields there, said one of the sources, who asked not to be identified because he was not authorized to speak to the media. New York City properties are also being actively targeted, the source said.
“The EPF has been watching the European market for the past three years,” the source told Reuters. “They have bought up London properties and are familiar with the laws. So the natural choice is to get into Europe itself. At the same time, New York City is definitely on the radar with its trophy properties.”
The deal will mark the EPF’s first foray into the euro zone.
An EPF official said on Friday: “It is our policy not to reveal our business strategy in public and not to comment on speculative news.”
The EPF-Goodman deal would be the latest in a string of tie-ups focused on industrial property in Europe including a venture between Prologis and Norway’s sovereign wealth fund, a venture between Segro and a Canadian pension fund, and Brookfield’s acquisition of Gazeley.
U.S. private equity giant Blackstone has also bet heavily on the sector and rapidly become one of Europe’s largest owners of industrial property. 
The EPF has invested at least 565 million pounds in Britain, including a 20 percent stake in the $12 billion redevelopment of London’s Battersea power station that was inaugurated by Malaysian Prime Minister Najib Razak this month.
The fund aims to lift overseas investments to 23 percent of total assets from 18 percent now within two years. By contrast, 70 percent of Singapore sovereign wealth fund Temasek’s S$215 billion portfolio was invested abroad by end-2012, data showed.
Currently, 5 percent of the EPF’s investments are channeled into real estate, including in Australia and Britain, with about 35 percent in equities and 55 percent in bonds. 
Mohamad Nasir Ab Latif, the EPF’s deputy chief executive officer for investment, told Reuters in an interview this month that the fund was “close to doing something there in Europe.” 

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