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Research firm positive over Battersea Phase 2 Project takeover

PETALING JAYA: Public Investment Bank Research is positive on the takeover of the commercial assets of the Battersea Power Station project by Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) from an associate company of Sime Darby Property Bhd and SP Setia Bhd, in which both companies hold 40% interest in.

Both groups could see their earnings lifted by at least RM400 million or at a 15% margin to its pre-tax profit should the proposal materialise, it said in separate reports.

The research house said that asset monetisation is part of the Sime Darby Property’s strategy of getting the best use of each piece of land while disposing non-strategic land. It has a target price of RM1.90 for Sime Darby Property.

“We still favour SP Setia for its sizable and well located landbank, consistent performance, good earnings visibility and decent dividend yield,” the research house said.

The price target for the stock was maintained at RM4.50.

The research house has given an “outperform” rating for both Sime Darby and SP Setia, supported by the view that the move will enable both companies to monetise their commercial assets more efficiently and redeploy the capital into subsequent development phases of the London project.

Earnings of both companies were kept unchanged at this point of time, as information remains sketchy due to the proposal still being in an early stage.

“We understand that residential pre-sales is now over 90% and the entire 470,000 sq ft of office space in the Battersea Power Station building has been let out to Apple. To recap, the Battersea Power Station project covers 42 acres and includes 3.5m sq ft of mixed commercial space, together with 4,364 new homes,” the firm said.

The two groups announced to the stock exchange that the Battersea Phase 2 Holding had entered into a heads of agreements with PNB and EPF to explore the terms of a potential sale on completion of the commercial assets currently being developed within Phase 2 of Battersea Power Station project, to a joint venture company to be formed between PNB and EPF.

Sime Darby Property's share price closed unchanged at RM1.59 with some 3.9 million shares done, while SP Setia closed up five sen to RM2.34 with some 4.5 million shares traded.


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PNB, EPF keen to take over phase two of Battersea Power Station project

SHAH ALAM: Permodalan Nasional Bhd (PNB) and the Employees Provident Fund, (EPF) long-term investors in the Battersea Power Station project in London, have shown interest in taking over the commercial assets being developed by Battersea Phase 2 Holding Co Ltd for £1.61 billion (RM8.8 billion).

Today, Sime Darby Property Bhd and SP Setia Bhd, both 40% interest holders in Battersea Phase 2, announced that Battersea Phase 2 Holding had entered into a heads of agreements with PNB and EPF to explore the terms of a potential sale on completion of the commercial assets currently being developed within Phase 2 of Battersea Power Station project, to a joint venture company to be formed between PNB and EPF.

Battersea Phase 2 Holding Co is a wholly owned subsidiary of Battersea Project Holding Co Ltd.

PNB and EPF expressed their interest to explore the transaction following strong progress made to date in Phase 2 with over 90% of residential units having been presold and the letting of the entire office space in the Power Station Building (about 470,000 sq ft) to Apple.

Sime Darby Property said in its statement the proposed transaction would provide increased certainty of investment return to Sime Darby Property and SP Setia as development partners earlier than would otherwise be the case, and enable both parties to focus on securing the development profit and investment returns from the remainder development in Phases 3 to 7 of the Battersea Power Station, which is estimated to be completed in 2028.

“The proposed transaction, once completed, would augur well with our business plans as it will enhance our investment returns and allow SP Setia to capitalise on arising opportunities as a property developer while continuing to play a significant role in the overall development of the project,” SP Setia said in a statement.

It added that the proposed transaction demonstrates the strong direct commitment by the ultimate institutional shareholders in the project.

The shareholdings in Battersea Project Holding will remain unchanged between Sime Darby Property, SP Setia and EPF. SP Setia remains committed to and is positive on the long-term prospects of the Battersea Power Station project.

Phase 1 (known as Circus West Village), which consists of 12 residential blocks and 100,000 sq ft of high-quality restaurants, shops, offices and leisure accommodation was handed over to the purchasers and tenants over the course of last year.

The Battersea Power Station project covers 42 acres and includes 3.5 million sq ft of mixed commercial space, together with 4,364 new homes.


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