Malaysia’s civil service pension fund Kumpulan Wang Persaraan (Diperbadankan) (KWAP) has purchased two purpose-built student accomodation buildings in the UK for £39.75 million ($51.2 million), it said in a statement on Wednesday.
The properties purchased were a four-storey freehold building at 800 Bristol Road in Birmingham, and a six-storey freehold building, The Mill House, in Edinburgh, priced at £14.62 million and £25.13 million, respectively.
Both properties are student housing spaces, located close to the University of Birmingham, University of Edinburgh, Heriot-Watt University, Edinburgh Napier University and Queen Margaret University.
KWAP said, the estimated average net yield of both properties is at 5.08 per cent. The properties were acquired from IP Investment Management (HK) Ltd and Maven Capital Partners.
“The acquisition aligns with KWAP’s aspirations to increase its international property exposure. We will continue to grow our presence in foreign markets without compromising on our risk appetite, in line with our mission to serve the pensioners of Malaysia,” said KWAP CEO, Wan Kamaruzaman Wan Ahmad.
The purchase of both properties brings the total number of properties under KWAP’s portfolio to 14, with other properties located in Australia, London and Germany. As of December 31, 2017, 75 per cent of KWAP’s property portfolio are made up of foreign properties while the remaining are local assets.
According to KWAP, the purchase of the properties was under the pension fund’s strategic asset allocation, which current stands at 40 per cent fixed income, 45 per cent equity, and 15 per cent alternative investments. The property portfolio takes up about 9 per cent of the alternative allocation, followed by private equity at 4 per cent and infrastructure at 2 per cent.
Established in 1991, KWAP is Malaysia’s second largest retirement fund and has total assets under management of RM140.8 billion ($34.8 billion).