US-based investment firm exploring potential warehouses in Malaysia

KUALA LUMPUR (Dec 27): Private investment company, Guidance Investments, is looking at potential warehouse opportunities in Malaysia to expand its property portfolio in the Southeast Asia (SEA) market, according to Guidance Investments’ Asian Real Estate managing director Pius Ho.

“We are looking for warehouse properties in Kuala Lumpur, Penang and Johor Bahru. However, we haven’t found a suitable property at the moment,” he told TheEdgeProperty.com.

Guidance Investments is the investment management and capital markets arm of Guidance Financial Group, which is a subsidiary of Capital Guidance Corp — a privately-held investment firm based in Washington, US.

Capital Guidance has more than 25 years of experience in real estate investments and has invested over US$5 billion (RM22.4 billion) in 110 properties in North America, Middle East and North Africa, as well as regions in Asia.

According to Ho, Guidance Investments’ Asian Real Estate currently owns four warehouse properties in the SEA region, including two in Bangkok, Thailand; one in Marunda District, Indonesia; and one in Seberang Perai, Penang.

The 10.4-acre warehouse in Seberang Perai was purchased by Guidance Investments in 2015. The logistics and industrial warehouse is now leased to Japan-based Mitsui Soko, and local companies: Premium Sounds Solutions and Recall, a document storage service provider.

Ho said the company is now in the midst of sealing a deal in acquiring its fifth property, which is located in Jakarta, Indonesia.

“The 30,000 sq m warehouse is now leased to three multinational tenants. We hope to close the deal before year end,” he added.

In this acquisition, Guidance Investments is looking at investing US$20 million to US$25 million.

Moving forward, Guidance Investments plans to raise another US$100 million to US$150 million fund for more acquisitions to expand its portfolio in the SEA region in the next 12 to 18 months.

“Approximately 20% to 25% of the raised funds will be used to invest in the Malaysian property market by acquiring warehouses,” he explained.

However, he noted that there are not many choices of good quality warehouses in the Kuala Lumpur area due to land scarcity and expensive land prices.

“Existing warehouses in prime areas are aging and lack suitable modern features to cater to current industries’ needs. I foresee in the next few years, the old warehouses will be demolished and rebuilt into multi-level warehouses to cater to market needs,” said Ho.

According to Ho, the company is looking at warehouses of at least 30,000 sq m, which could house multiple tenants, in KL, Penang and Johor Bahru.

“Location and accessibility, as well as good quality buildings with modern facilities for logistic industries are our main considerations in looking for potential properties,” he added.

Despite the market slowdown, Ho believes that the changing consumer spending behaviour, from buying in physical shops to online shopping, could lead to higher demand towards bigger warehouses as e-commerce operators will need to look for logistic and industry warehouses.

On the investment in warehouse properties, he noted that the yield is more appealing compared to other properties.

“Good quality warehouses in prime areas could fetch a rental yield of about 6% to 7%. It may not reach 7% initially but the yield will grow in the next seven to eight years,” he said.