PMO defends Felda’s RM500m London hotel foray, says will bring yield
(MM) – Deputy Minister in the Prime Minister’s Department Datuk Razali Ibrahim insisted today that the Federal Land Development Authority’s (Felda) RM500 million investment into a hotel in London will bring yield, although he could not give an estimated figure.
He was responding to Bagan MP Lim Guan Eng’s question in Parliament on the amount and type of investment made by Felda in the hotel business in London, which was not related to its core business of commodity plantation.
The DAP politician had also asked the Prime Minister’s Department to state Felda’s financial performance and whether the revenue is adequate to finance the capital expenditures or investment cost.
“The cost to buy the hotel or serviced apartments was £98 million (RM502 million), but valuation on paper is £115 million and, according to our research, that place can bring in profit because it has an occupancy rate of 90 per cent every month.
“The investment is an opportunity for the subsidiary company, but I can’t answer if the investment can bring profit or if the capex will be enough,” the Muar MP said.
Residential Land sold the freehold of Grand Plaza Serviced Apartments for £98 million to FIC UK Properties, a subsidiary of Felda Investment Corporation (FIC) Sdn Bhd in early September 2013.
The serviced apartment is one of the biggest in London, has 198 apartments across 13 period stucco-fronted buildings over 105,044 square feet, near the Bayswater Subway station.
Razali said that it is important to not “put everything in one basket”, in justifying the Felda’s move to invest in non-agricultural sectors. Felda now owns nine hotels in total.
Last month, Lim had asked Felda chairman Tan Sri Isa Abdul Samad to own up to the “real reasons” behind FELDA’s decision to invest some RM700 million in the hospitality and information technology sectors.
Chided by Isa for being a busybody, the opposition lawmaker retorted that the FELDA chairman owed an explanation to the one million-plus FELDA settlers the reason for the land authority’s decision to spend nearly RM600 million to buy two hotels and a further RM110 million to acquire a 25 per cent stake in public-listed Iris Corp instead of parking their money in a field related to agriculture, its core business.
Isa had also recently denied reports that the Malaysian Anti-Corruption Commission (MACCA) is investigating the purchase, as reported by the news portal The Malaysian Insider.
There are seven subsidiaries under Felda, three of which are not involved in its core business.
They are Felda Global Ventures Middle East Sdn Bhd, Grand Borneo Hotel Sdn Dhd, and its investment arm, FIC, he said.
“All the investments by the subsidiaries are being monitored closely,” the Umno Youth vice-chief said.
