MGPA to buy more properties in Malaysia

MACQUARIE-controlled MGPA, a private equity real estate investment advisory company, will use part of its Asia Fund III (AF III) to acquire more properties in Malaysia, its top official says.

Chief executive officer for Asia developments Michael Wilkinson said it is looking to buy integrated and stand-alone properties, land, and old buildings that require a complete makeover.

MGPA will not allow the state of the current economy to deter its plan to grow and hence, will also buy over real-estate companies, he said.

"We are reviewing some opportunities now, but can't comment further until the deals are done. We are looking quite broadly in Malaysia," he said.
Wilkinson was speaking to Business Times after a media briefing in Kuala Lumpur recently on the RM1.3 billion redevelopment of The Intermark (previously City Square Centre) and Integra Tower (previously Plaza Ampang Mall).

The AF III real-estate fund, which closed last year, has raised US$3.9 billion (RM14.1 billion), resulting in a potential buying power of US$15.6 billion (RM56.5 billion).

According to its website, the fund has already committed equity of US$2.2 billion (about RM8 billion) to investments in Singapore, Japan, China and Thailand in the office, retail, residential, hotel and logistics sectors.

It has active opportunities under consideration in South Korea, Malaysia, Taiwan and Australia.

MGPA's first property acquisition in Malaysia was City Square and Plaza Ampang, acquired in 2007 through AF II, for RM760 million.

Wilkinson said MGPA will not sell its Malaysian properties for now. He also did not rule out disposing of the assets if a good offer comes in later and reinvesting the capital.

He said if MGPA is faced with the same opportunity to buy assets like City Square and Plaza Ampang in the present economy, it will invest in the deal.

"If there's a good location and growth prospects, we will invest tomorrow. It is a good time to be investing, particularly in a strong market like Malaysia. If we are going to endure one to five years of downturn, let it be ... we have quality assets to sustain," he said.

Wilkinson said the current situation is a short-term cyclical occurrence and investors should not be distracted by it.

"In this climate, there is an expectation that a lot of people will be under pressure and selling good quality assets. We have not seen that happening or experienced the market disintegrating in terms of pricing," he said.

"If you feel the financial market will be dislocated forever, then sell your assets. But if you believe its a short-term effect and the market will correct and the government will respond, then in not too long, the situation will improve," he said.

Wilkinson believes there will be a similar correction as during the Asian financial crises in 1997 and the severe acute respiratory syndrome outbreak in 2003.

Although the present situation may take one or two years to recover, it will not have any impact on MGPA's investment strategy, he added.

"Our job is to manage other people's money and that carries with it some very serious obligations. Fortunately for us, we invest in real estate, which fundamentally is about location, supply, demand and long-term economic performance.

"We have the ability to create value, which is why we will buy even the ugliest of building, and turn it around," Wilkinson said.

By Business Times (by Sharen Kaur)