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- The property developer has agreed to become an anchor investor in TrustCapital Australian Office Fund No 3. The fund is managed by Singapore-based TrustCapital Advisors Investment Management Pte Ltd, which has a strong track record in the acquisition, management and divestment of Australian office assets, said EWI Capital in a statement.
KUALA LUMPUR (Oct 30): EWI Capital Bhd (KL:EWICAP), formerly Eco World International Bhd, is pivoting its business to investment holding with a A$100 million (RM276.5 million) commitment to a fund investing in prime Australian office buildings.
The property developer has agreed to become an anchor investor in TrustCapital Australian Office Fund No 3. The fund is managed by Singapore-based TrustCapital Advisors Investment Management Pte Ltd, which has a strong track record in the acquisition, management and divestment of Australian office assets, said EWI Capital in a statement.
The investment will be financed using a combination of internal funds and borrowings.
The fund it is investing into aims to secure capital commitments of up to A$500 million, with an ultimate target of managing assets worth up to A$1 billion. The fund is set up to deliver an internal rate of return (IRR) of above 10% per annum.
It plans to invest in three to four prime office assets located across identified Australian capital cities. The fund has an eight-year tenure, with an option to extend for up to two additional years.
EWI Capital said the investment in the fund aligns with its strategy to explore strategic investment and development opportunities that can generate nearer-term income.
“Prime office assets in Australia currently yield approximately 6% to 8% annually, with some available at prices below their replacement cost. With the use of gearing, we are targeting annual cash returns above these rental yields and we are confident of achieving overall returns in excess of our base target IRR of 10%,” said Datuk Teow Leong Seng, EWI Capital president and chief executive officer.
Teow also expressed optimism about the medium-term outlook for office demand in Australia, citing expectations that the supply of new office buildings will decrease due to elevated construction costs.
Regarding the fund manager, EWI noted that TrustCapital Advisors Investment Management's earlier funds—Australian Office Fund No 1 and No 2—had managed peak assets of A$740 million and A$450 million, respectively. Upon divestment in 2017, these funds achieved IRRs ranging from 11% to 24%.
Assessing value of its existing portfolio
On the property development side of the business, EWI Capital said it is assessing the current market value of its existing portfolio. The goal is to determine which sites should be sold to raise capital for reinvestment, and which should be retained for development.
This revaluation includes assessing the need for any impairment to accurately realise the sites' value.
“By unlocking the capital tied up in some of our undeveloped projects, we will be better positioned to take advantage of the present window of opportunity where property investment in certain sectors offers relatively attractive and compelling risk-adjusted returns,” Teow said.
“Our ultimate objective from this whole exercise is to raise cash, clean up our balance sheet and establish a clear pathway for EWI Capital to return to profitability as soon as possible,” he added.
EWI independent non-executive director Datuk Kong Sooi Lin will abstain from board deliberations and voting on this matter, as she also sits on the boards of TC Advisors Australia Investment Management and TCA Real Estate Sdn Bhd.
EWI Capital’s shares closed unchanged at 26 sen on Thursday, giving the group a market valuation of RM624 million.
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