The Malaysian Reserve

Battersea Power Station’s ownership reorganisation plan to continue

Anwar says BPs was among the ‘dubious’ deals using state funds (Pic: TMRpic)

BYy DASHVEENJIT KAUR / Pic By TMR

The second phase for Battersea Power Station’s (BPS) ownership reorganisation would likely take place as it will fetch long-term investment yield to all stakeholders.

BPS developers Sime Darby Property Bhd and SP Setia Group Bhd stated in a joint statement that the potential reorganisation of ownership of commercial assets in BPS is a strategic move to enable the developers to reallocate capital for other developments.

Both developers stated that main shareholders of BPS — Permodalan Nasional Bhd (PNB) and Employees Provident Fund (EPF) — also viewed the reorganisation of ownership as a “strategic opportunity to secure owner- ship of a unique and iconic real estate asset.

“The project will, in turn, be able to deliver sustainable income streams into the future to meet their income needs.”

The statement came after Datuk Seri Anwar Ibrahim (picture) stated in an interview with The Guardian that the BPS deal, along with other “dubious” deals paid by the Malaysian sovereign fund and pension funds, are to be re-looked and renegotiated if there were any wrongdoing.

In the interview, the PKR de facto leader said BPS was among the deals using state funds.

“We have to be convinced that this was the right investment decision and that there was no political influence or direction (within Malaysia),” Anwar told The Guardian in an interview on Tuesday. Currently, PNB and the EPF together own approximately directly and indirectly 67% of the equity in the BPS development.

PNB holds majority stakes in SP Setia and Sime Darby Property, which jointly own 80% of the equity in the BPS development, while the EPF directly owns 20% of BPS.

The developers, however, reiterate that the site acquisition and the subsequent costs of the development have been fully funded by a combination of equity from the shareholders — with development debt provided on commercial terms by a mixed group of nine Malaysian and international lenders.

They noted that the £458 million (RM2.44 billion) development loan for the first phase has been fully repaid ahead of schedule.

The initial capital invested into the project by the developers and the profit from the first phase is now being reinvested into developing the subsequent phases.

On Jan 18 this year, PNB and the EPF signed a heads of terms agreement with Battersea Phase 2 Holding Co Ltd, a Battersea Project Holding Co Ltd in which SP Setia and Sime Darby Property own a 40% stake each, to initiate preliminary negotiations to purchase the commercial assets for an estimated total consideration of £1.61 billion.

The developers also noted that the purchase price of the commercial assets — which include office, retail, food and beverage, and others — are subject to further due diligence and on the basis that the development is completed and fully tenanted.

The developers also said BPS was acquired by Sime Darby Property, SP Setia and the EPF through “a competitive tender process” in September 2012.

“As announced on May 15, 2018, the exclusivity period for the transaction has been extended to June 29, 2018.

“The parties are continuing to work positively and constructively together toward completing the proposed transaction and a further announcement will be made in due course,” said the developers.

Sime Darby Property and SP Setia noted that work on the BPS building is on track and is scheduled to open to the public in late 2020.

It is expected to attract a crowd of 40 million annually.

To recap, a total of 500,000 sq ft office space has been pre-let to Apple Inc, one of the world’s leading technology companies.

This also represents one of London’s largest ever office pre-lets.

In addition, BPS will house 120 shops and restaurants, event space and visitor attractions, creating a new town centre for London.

There will also be 253 residential apartments (currently 90% are sold).

Following Anwar’s comment, shares of SP Setia lost 25 sen, or 7.81% to RM2.95, but regained to close at RM3 yesterday.

Sime Darby Property fell eight sen, or 6.2% to RM1.21 after the talks on BSP, but inched up four sen later to close at RM1.25 yesterday.