LTH still has RM35b properties allocation

KUALA LUMPUR: Lembaga Tabung Haji (LTH), which is in the midst of
finalising its first commercial property acquisition in London, still
has the cash to make more acquisitions going forward.

Its group
managing director/chief executive officer, Datuk Ismee Ismail, said the
pilgrims fund board has only used half of the RM7 billion that it has
allocated to acquire real estate in Malaysia and overseas.

In an
interview with Bernama, he said the RM7 billion fund accounted for 20
per cent of the total fund managed by LTH, currently amounted to RM35
billion.

"I think we are still under-invested. The investment in
real estate has not touched RM7 billion. Our focus firstly will be on
properties in Malaysia, which we have started doing that for the past
three years," he said.

Ismee said the remaining RM3.5 billion
allocation may not be used up entirely this year eventhough there were
many viable properties up for grabs.

"Buildings are plenty but we have to be cautious in our evaluation before acquiring any of them.

"We
have to ensure the returns are competitive every year, so we have to
study the types of investments that will give recurring income and I
believe the property sector is one of them," he said.

On the
proposed acquisition of commercial building in London, he said, the
deal, which was estimated to be worth of 165 million pound, was
expected to be completed by this September.

"In UK, we wanted
to buy commercial buildings and not hotels or housing because we want
to get the rents which are reasonable and the rental is for long tenure.

"Like
the present building we are evaluating, the tenure is for 13 years.
Those are the kinds of areas that we are looking for in real estate
investments," he said.

Ismee said based on the fund's investment
analysis, investment in London, if it's fully funded by cash, the
expected return would be at least 5.2 to 5.5 per cent yearly which was
competitive.

"If we apply a certain percentage of gearing and
take bank borrowings, the yield or rental will increase. Currently, we
are going for cash basis but we may refinance the acquisition by bank
borrowings later.

"This is our first acquisition so I think we
will take step by step," he said, adding that LTH was actively looking
for more commercial properties in London.

Apart from London, LTH
was also actively looking to invest in real estate in Mecca and Madinah
as well as Jeddah, Saudi Arabia, he said.

Ismee said Saudi
Arabia did not allow non-citizen to own properties in Mecca and
Madinah, therefore any investments by Tabung Haji must through
long-term leasing.

Tabung Haji currently earns a recurring
income from its 25-year lease of the Hajar Towers Hotel in Mecca and
the 10-year lease of the Movenpick Hotel in Madinah, both in Saudi
Arabia.

At the moment, Tabung Haji also owned several landmarks
in Kuala Lumpur which include Tabung Haji building, TH Selborn, Tabung
Haji tower in Platinum Park as well recently acquired, a
13-storey boutique office building in Bangsar South. -- BERNAMA