Analysts positive on SimeProp’s disposal of Battersea Power Station commercial spaces

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The purchase price is subject to a due diligence exercise and will be paid in stages throughout the balance of the construction phase of The Power Station building.

KUCHING: Sime Darby Property Bhd’s (SimeProp) move to sell Battersea Power Station phase 2 (BPS2) commercial spaces (The Power Station building) to Pemodalan Nasional Bhd (PNB) and Employees Provident Fund Board (EPF) garnered positive views from analysts.

In a filing to Bursa Malaysia, SimeProp announced that Battersea Phase 2 HoldCo, an indirect 40 per cent owned joint venture company of SimeProp, had entered into an outline heads of terms (HoT) with PNB and EPF.

The HoT sets out the basis for the parties to negotiate the terms of a potential sale on completion of the commercial assets currently being developed within Phase 2 of the Battersea Power Station project in London, to a joint venture company to be formed between PNB and EPF.

According to Maybank Investment Bank Bhd’s research arm (Maybank IB Research), the selling price is estimated at around 1.6 billion pounds (or RM8.8 billion based on RM5.47 per pound).

The purchase price is subject to a due diligence exercise and will be paid in stages throughout the balance of the construction phase of The Power Station building.

The purchase price shall be based on an agreed stabilised net property income, capitalisation rate and/or such calculation that is to be mutually agreed.

“We are positive on this deal as the sale proceeds could be re-deployed to develop the remaining phases (3 to 7) of the Battersea Power Station project till estimated 2028.

“This would help to lessen the capex burden for Battersea Phase 2 HoldCo amidst the Brexit uncertainty which could slow down the development pace of the Battersea Power Station project,” the research team said, noting that The Power Station building will complete construction in late 2020.

It added, the project comprises of 25 per cent residential (with 250 units of luxury apartments; circa 90 per cent sold), 25 per cent office space (which has been pre-let to Apple) and the remaining will be retail and leisure.