AmProp unit to invest in real estate projects in Spain

KUALA LUMPUR (July 14): Amcorp Properties Bhd (AmProp) plans to invest in a portfolio of real estate development and value-added projects in Madrid and other cities in Spain.

In a filing to Bursa Malaysia today, it said Amcorp Horizon Sdn Bhd (formerly known as Cemara Harapan Sdn Bhd) has signed an agreement with Grosvenor Europe Investments Ltd (GEIL) and its manager, Grosvenor Fund Management Spain, SLU.

This is to set up a joint venture (JV) company known as Urban Value Add I (Spain), S.L., which is also a party to the agreement.

GEIL is principally involved in property investment through its holdings in a number of investment vehicles.

Grosvenor Fund Management is a wholly-owned subsidiary of Grosvenor Group Ltd, and is appointed by the JV company as the real estate investment manager under a separate asset management agreement, to manage and report on the activities of the JV company.

The issued and paid-up share capital of the JV company is €3,000 (about RM13,144) comprising 3,000 shares of €1 each. Amcorp Horizon and GEIL will hold 1,500 shares or a 50% stake each in the JV company.

Amcorp Horizon and GEIL each contributed a capital commitment of €35 million to the JV company.

AmProp said the Spanish real estate market offers huge potential for capital appreciation, on the back of a resurgence in economic activities.

"Through this joint venture, AmProp would be able to leverage on the expertise and experience of Grosvenor, which has been operating in Spain since 2000, to benefit from the recovery of the Spanish real estate market as well as further diversify its international property investment and development portfolio," read the group's announcement.

The capital commitment of €35 million to be forked out by Amcorp Horizon for the JV company will be funded by advances from AmProp by way of the internally generated funds of AmProp group and bank borrowings, the breakdown of which would be ascertained at a later date.

The JV is expected to contribute positively to the future earnings and growth of AmProp Group.

The move into the Spanish real estate market may be timely for AmProp, as Affin Hwang Capital stated in a July 8 note on the company that more than 90% of AmProp's earnings are derived from London and the Brexit vote could raise uncertainty on future sales over the near term.

AmProp shares were down 1 sen (1.2%) to close at 83.5 sen today, for a market capitalisation of RM496.17 million. — theedgemarkets.com

Not sure how much you will have to pay a month for your home? Check out our mortgage calculator here.