AmFIRST may hike rents at The Summit by up to 50%

PETALING JAYA: AmFIRST Real Estate Investment Trust (AmFIRST REIT) is looking at revising the rental rates for The Summit Subang USJ mall in Subang Jaya by 40% to 50%, after the completion of its RM80 million refurbishment exercise in July next year, said Am ARA REIT Managers Sdn Bhd acting chief executive officer Zuhairy Md Isa.

“At the moment, our rental rate is about RM2.20 per sq ft, which is very low compared with other major urban malls in the Klang Valley. However, the rental revision will be discussed with the tenants first, and we will also let market demand determine the rates [then],” he told a media briefing yesterday.

The Summit Subang USJ mall, a mixed property located at Jalan Kewajipan in Subang Jaya, was acquired by AmFIRST in 2008. The trust owns about 70% of the retail space at the mall, while the rest is held by private owners with strata titles.

The property contributed to 24% of AmFIRST’s revenue of RM112.79 million for the financial year ended March 31, 2014 (FY14).

Am ARA head of investment Panneer Selvam said the RM80 million capital expenditure will be shared among AmFIRST REIT and other owners, and will be used to revive and revitalise the interior and exterior spaces of the shopping complex.

“About RM66 million will be set aside to revamp the mall’s retail space while the rest will be utilised for the [renovation] of the façade and car park,” he said.

He also noted that the investment to rejuvenate The Summit Subang USJ mall is expected to give a return on investment of between 15% and 17% within seven years.

The retail space’s strata ownership is among the reasons why it took AmFIRST about seven years to embark on a major exercise to refurbish the ageing mall. This is because any initiative by AmFIRST to provide a major facelift to the property requires the consent of the other owners of the retail units.

The extensive makeover, which started last month, will allow AmFIRST to reposition The Summit Subang USJ mall to get the right tenant mix to attract a wider range of shoppers around the Subang Jaya area.

Zuhairy said the upgrading process is segmental, which means that work will be done in phases starting from the top level downwards.

Zuhairy: About RM66 million will be set aside to revamp the mall’s retail space.

In the meantime, current tenants will be relocated to other parts of the complex.

AmFIRST recorded a net property income of RM76.48 million for FY14, a 3% increase from RM74.17 million recorded in the previous financial year. Net income increased by 7% to RM50.27 million in FY14.

Based on the closing price of 97.5 sen per unit as at March 31, 2014, this represented a dividend yield of 7.54%.

The REIT has nine properties in its portfolio including Bangunan AmBank Group in Jalan Raja Chulan, Menara AmBank in Jalan Yap Kwan Seng, Menara AmFIRST in Section 19, Petaling Jaya, as well as Prima 9 and Prima 10 in Cyberjaya.

In November 2012, AmFIRST acquired Jaya 99 in Melaka for RM86 million.


This article first appeared in The Edge Financial Daily, on May 16, 2014.