Malaysian Employees Provident Fund (EPF) has bought a £200m portfolio of industrial assets from IM Properties, in one of the biggest portfolio sales to land this year.
The portfolio, named Project Phoenix, is made up of 18 properties and has been sold to CBRE Global Investors, acting on behalf of Malaysia’s state pension scheme - which had been keen to acquire prime UK assets in the distribution and logistics sector.
The 18 assets are located on business parks and industrial estates stretching from Heathrow to Birmingham, totalling 2m sq ft.
The £200m price-tag represents a significant chunk of IM Properties’ group-wide holdings of £900m, but managing director Tim Wooldridge said now was the perfect time to further strengthen its buying power in the market.
He said the catalyst for the decision to sell was the dramatic collapse in China’s stock market last August and slide in the commodities market.
“We have always been opportunistic in our approach to deal-making, so thought it the ideal time to test the market for our industrial portfolio ahead of economic headwinds manifesting themselves in pricing. If solid interest was there, and at a strong price for us, we could generate a significant cash pile for acquisitions and expansion during a more uncertain 2016.
“When economies start to slow, a lot of people just sit on their hands and wait to see what happens, but we pride ourselves on being fleet-of-foot, and thought there would be value opportunities for cash buyers.”
IM Properties’ UK investment director, John Hammond said a shortlist of institutional buyers in the UK and overseas was identified last autumn.
Hammonds said: “We were delighted with the strength of the responses, and the calibre of the institutions involved, so we decided to proceed. We knew the EPF had its eye on industrial assets in Western Europe, because it had put €250m into Germany in July 2015 and had fully mandated CBRE Global Investors to source product in the UK.
“We also knew they had the resources and the desire to proceed with the deal, so negotiations would not become protracted as deliverability is always important. They and their agents were keen to acquire the portfolio, so we got the agreement into legals in November, and exchanged contracts in February.”
Wooldridge added that the continued uncertainty in the equity and commodity markets had underlined the wisdom of the decision to sell.
“Everything which has happened, here and overseas, confirms that we have taken the money off the table at just the right time,” he said.
“Some of the money will go into our existing development pipeline, some will be used to acquire income-generating assets, and after that it’s a question of identifying potential acquisitions which are available at prices which represent value.
“We’re open-minded, as always, about which sector we will invest it, and we could even go back into the industrial market. If we spot the right opportunity, and the value is there, the sector is almost irrelevant.
“We’d never try to call which way the markets will go, but are confident that opportunities will present themselves, and that the uncertainty means there will be fewer buyers in play. It’s too soon to say when we might buy, but I would expect the first deals to go through in the first half of 2016.
“Geography isn’t crucial, but because we are based close to Birmingham, most of our asset purchases tend to be in the South or the Midlands, and that approach is likely to continue.”
IM Properties was advised by CBRE.