Empire Shopping Gallery

MAMMOTH Empire Holdings Sdn Bhd, the property developer and asset manager behind Empire Shopping Gallery in Subang, Selangor, plans to raise funds through a maiden issue of bonds.

MEH, which has RM4 billion worth of jobs in hand, including the construction of Empire City Damansara I, and is scheduled to launch Empire City Damansara II later this year, has identified an investment bank and a rating agency to assist in the debt issue.

“We have engaged Hong Leong Investment Bank Bhd to issue the bonds for Empire Shopping Gallery,” MEH co-founder and group executive director Datuk Danny Cheah tells The Edge.

Empire Shopping Gallery is a six-year-old mall that earns recurring income for the group.

According to Cheah, MEH has also engaged the services of credit rating company RAM Holdings Bhd.

Although the process is in its final stages, Cheah could not provide any information on the sum the company plans to raise from the bond sale or the duration of the paper. “We don’t have all the details yet. The paperwork has been done but it could take a couple of months to confirm all the figures.”

The money raised could be used as working capital or in any way MEH sees fit and is not limited to Empire Shopping Gallery, he says in response to The Edge’s question as to whether MEH had sold the shopping centre, as claimed by some.

He adds, however, that the planned bond issue does not mean Empire Shopping Gallery will not be sold should it receive an attractive offer. “We are keeping our options open.”

In June, The Edge reported that MEH was willing to divest Empire Shopping Gallery if a good offer came by. At the time, the latest valuation for the mall was RM583 million. However, Cheah says a more recent valuation done for the purpose of the bond issue places the value at RM600 million.

With a gross built-up of 600,000 sq ft and net lettable area of 350,000 sq ft spread over five levels, the mall registers 6.5 million shoppers a year. The yield from the 98%-occupied shopping centre is between 6.5% and 7%.

Empire Shopping Gallery is said to have attracted offers since it opened for business six years ago. Its opening together with the adjacent Empire Hotel — which is also owned and operated by MEH — helped raise the profile of the group. The shopping centre is also linked to Empire Soho and Empire Tower.

Cheah helms the group with co-founder and group managing director Datuk Sean Ng Yee Teck.

According to Cheah, Empire Hotel’s average occupancy and average room rate is 85% and RM280 per night. WOLO Bukit Bintang, Kuala Lumpur, another hotel owned and operated by MEH, enjoys the same level of occupancy and ARR.

Meanwhile, the RM4 billion covers the sales value of properties that are currently being built by the group. Cheah says MEH also has RM1 billion worth of unbilled sales. “These are contracted sales that have not been billed yet. They will be realised via progressive billing according to the schedule of claim.”

Empire City Damansara I — MEH’s largest ongoing integrated project — is located on a 28-acre site opposite the PJ Trade Centre along Lebuhraya Damansara-Puchong. Once completed, MEH can expect to see recurring income from the mall with its NLA of 2.3 million sq ft as well as five of the planned hotels. Three of the hotels will be under the Marriott International Inc brands of Marriott Hotel, Autograph Collection and Ritz-Carlton while the other two will be a 150-room WOLO and a 150-room cinema hotel called McGuffin — brands owned by MEH.

Three office buildings in Empire City Damansara 1 have been sold en bloc: a 38-storey block to HCK Group to house the HCK Corporate Tower; an 18-storey signature tower with an NLA of 239,253 sq ft and 319 parking bays to Pelaburan Hartanah Bhd; and a 13-storey block to ESH (Electrical) Sdn Bhd.

MyEG Services Bhd has bought 26 storeys of stratified units in a 45-storey building that is easily identifiable by its golden/copper façade. It is also learnt that three companies with interests in retail fashion, rubber gloves and property development have purchased several floors of this office building.

The development also features two serviced apartment blocks and three blocks of small offices/home offices.

Empire City Damansara II, which will be located across the highway from Empire City Damansara I, will occupy 65 acres — double the size of the first phase — and its gross development value will be in excess of RM10 billion.

This article first appeared in The Edge Malaysia on Aug 1, 2016. Subscribe here for your personal copy.

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