Retirement fund KWAP sets sights on two local properties


KWAP, Property Investment, Property fund

KUALA LUMPUR: Fresh from acquiring its first shopping mall in the United Kingdom, Retirement Fund Inc (KWAP) is close to securing its maiden real estate deals in Malaysia.

Chief executive officer Wan Kamaruzaman Wan Ahmad said that the fund was negotiating deals for two commercial properties in the heart of Kuala Lumpur that it hoped to close by this year.

“The first property is already occupied, while the second is a forward purchase, which is yet to be built but we intend to buy it in the future,” he told reporters after announcing KWAP’s results for the financial year 2013 (FY13) yesterday.

The pension fund currently owns or co-owns seven properties overseas – four in Australia and three in the United Kingdom.

While declining to comment on the specific investment amount for its local real estate investments, Kamaruzaman said KWAP had allocated about RM1bil of its fund for the local property deals.

For the first six month of 2014, KWAP’s total funds stood at RM107bil.

“At the moment, the global market is pretty challenging. As far as our property investment in the UK and Australia, this year we only bought one so far. This is because the price has gone up and there is a bit of yield compression,” he said.

In June, KWAP bought an 80% interest in the Intu Uxbridge shopping centre for £174.8mil (RM961.4mil). The shopping centre has a net lettable area of 42,041 sq m and 71 stores, cafes and restaurants.

“We are looking at an annualised yield of 6.2% from the shopping complex,” Kamaruzaman said.

The latest transaction has pushed KWAP total investment in international property to about 4.5% of its total funds, or RM4.8bil.

In FY13, all six properties in the KWAP portfolio generated net cash income of RM154.55mil. The average annualised net yield for the four Australian assets and two UK assets stood at 6.1% and 5.7%, respectively.

Kamaruzaman said the fund was looking for a potential property acquisition in the United States, and that it had completed the preliminary study in the country.

Moving forward, he expected KWAP’s fund size to continue growing between 10% and 12% annually.

“For this year we are looking for a return on investment of about 5.5% on the back of the bullish outlook for the economic growth,” Kamaruzaman said.

Despite foreign investors selling in the local equities market, he expected the local bourse to perform better than its current level, as domestic institutional funds would take up the slack.

Yesterday, the FBM KLCI was down 8.68 points, or 0.46%, to 1,862.31.

For FY13, KWAP grew its fund size by 12.61% to RM99.92bil from RM88.73bil in 2012. It recorded a gross return on investment (ROI) of 7.05%, surpassing 2012’s ROI of 6.48%. It also received a RM1.5bil contribution from the Federal Government and RM2.69bil from statutory bodies and other agencies.

KWAP was corporatised in 2007, with a fund size of RM48.08bil.


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