PHA3M -- Lembaga Tabung Haji will be focusing on plantation and properties for more recurring and sustainable income source to its business for the next three years to 2020. For its plantation division, the pilgrims fund will focus on replanting rather than venturing into greenfields and has allocated RM2 billion for investments into overseas property investments.
Group managing director and chief executive officer Datuk Seri Johan Abdullah said for property, the investment would be towards acquiring properties in Australia and the United Kingdom where the group had enjoyed good returns.
“As of right now, our investment portfolio composition is 47 per cent equity, 23 per cent fixed-income, 11 per cent properties and the remaining 19 per cent cash,” he said.
“Our plan for the next three years is to focus on recurring and sustainable source of income. One of the ways is through our property investment plans in Australia and the United Kingdom.” Johan said the fund had already identified some properties in both countries, but yet to proceed with anything concrete.
“The board has already approved for us to grow the property division up to 15 per cent from 11 per cent. However, the property sector is mostly a long-term investment. In future, we will focus on areas that will lead us to recurring income,” he said.
This is also part of Tabung Haji’s long-term strategy to rely less on equity returns. “Asset allocation-wise, we do have a big exposure in equities, of which we rely on price and dividend payouts, but as we have seen in 2015 and last year, this will no longer be sustainable. “We need to be prudent in our approach in managing our RM64 billion of assets under management (AUM). We are also mindful of our reserves, but sometimes we tap the reserves to be used for hibah (income distribution),” said Johan.
In 2015, Tabung Haji sold two properties at Buckingham Palace Road in London to GAW Capital Partners for £498.5 million (RM2.76 billion), translating to a five per cent yield, according to a report by global real estate service provider Savills. It was also reported last year that it was seeking to sell its 10 Queen Street Place building in London for about £200 million. The group also completed the refinancing of 3 Collins Square development in Melbourne, Australia, last year, under an Australian dollar-denominated financing — the first fully syariah-compliant facility arrangement of its kind involving a property in the country. As of 31 December last year, Tabung Haji owned three properties in the UK, two in Australia and nine buildings in Saudi Arabia as well as other investments in Malaysia. (*)
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