Transaction Rationale

KIT and MPIC had each acquired their respective 50% equity stakes in PCSPC in early 2021. The Transaction is in line with KIT’s long term investment strategy to focus on lower carbon energy transition segments. As significant capital will be required to grow and scale up PCSPC, which would in turn  further entrench KIT in the business, KIT Trustee-Manager took the opportunity to divest the asset. In  addition, the Transaction would strengthen KIT’s balance sheet and increase its financial flexibility to pursue other growth initiatives.

But some investors warn there are worse realities lurking within unsold portfolios. “The beauty of our industry is that it is so opaque and inconsistent,” says one senior executive at a private equity group.

“Some managers will be more honest. And some have been more optimistic. I think it’s all over the place. And we won’t really know until the transaction volume picks back up.”

Not all property investors conduct third-party valuations like the one applied to Citypoint, relying instead on their own appraisals.

The beauty of our industry is that it is so opaque and inconsistent. Some managers will be more honest. And some have been more optimistic. I think it’s all over the place

Hamid Moghadam, chief executive of Prologis, the largest US-listed commercial landlord managing around $200bn, says some managers are posting “phoney baloney” returns because they have not written down property values to reflect market reality during the downturn.

“The strategy in that case is just to hold your breath long enough that values come back and you never have to write it down,” he adds. “But I don’t think that is the right way of treating your investors.”