Sime Darby Property, SP Setia say Battersea Power Station project 'purely an investment consideration'

PETALING JAYA: In rebutting Parti Keadilan Rakyat (PKR) de facto leader Datuk Seri Anwar Ibrahim's claim that their investment in London's Battersea Power Station project was a "political decision", Sime Darby Property Bhd and SP Setia Bhd said in a joint statement today that it was purely an "investment consideration" and the project was acquired via a competitive tender process in September 2012 together with the Employees Provident Fund (EPF).

Anwar was quoted as saying that previous government's dubious investments, including the Battersea project, would be investigated over alleged use of public funds for project financing.

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

"The £458 million development loan for Phase 1 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," they added.

At present, Permodalan Nasional Bhd (PNB) and EPF together own directly and indirectly 67% equity in Battersea. PNB holds majority stakes in SP Setia and Sime Darby Property, which jointly own 80% of the equity in the development while EPF directly owns 20% of the development.

In January this year, the shareholders and management of Battersea were considering a divestment of the commercial assets and had initiated conversations with PNB and EPF with an estimated total consideration of £1.608 billion (RM8.6 billion), which is subject to further due diligence and on the basis that the development is completed and fully tenanted.

The exclusivity period for the transaction has been extended till June 29, 2018 and the parties are working together towards completing the proposed transaction.

"As previously assured by all parties, the decision to explore the potential reorganisation of ownership is purely an investment consideration initiated by the Battersea board and management team, together with EPF and PNB.

"From the perspective of Sime Darby Property and SP Setia, as property developers, the transaction will enable us to continue to reallocate capital to other areas of their development businesses," the property developers stressed.

For PNB and EPF, it is a strategic opportunity to secure ownership of a "unique and iconic real estate asset" that would be able to deliver sustainable income streams into the future to meet their respective income needs. The transaction is expected to generate an attractive long-term yield for investors.

More than 99% of the residential units in the first phase, Circus West Village, have been sold and work on the power station building is in progress and is scheduled to open to the public in late 2020.

The power station will also house 120 shops and restaurants, event space and visitor attractions as well as 253 residential apartments, of which 90% have been sold.

Shares of Sime Darby Property and SP Setia rebounded today, rising 4 sen or 3.3% and 5 sen or 1.7% to settle at RM1.25 and RM3.00.