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Parkson to dispose of KL Festival City Mall for RM349m

KUALA LUMPUR: Parkson Holdings Bhd is selling KL Festival City Mall for RM349 million in cash, as the group intends to concencrate on developing larger malls to drive the department store group’s expansion plans.

In a filing with Bursa Malaysia yesterday, Parkson said the group and its wholly-owned subsidiary, Festival City Sdn Bhd, have signed a conditional sale and purchase agreement (SPA) with Festival Mall Sdn Bhd and AsiaMalls Sdn Bhd for the disposal of the mall.

According to Parkson, Festival Mall and AsiaMalls are owned by Pramerica Asia Retail Ltd — one of the largest private open-end property funds in Asia, with an aggregate gross asset value of over S$3 billion (RM7.6 billion) as of June 2014. Pramerica has investments in 11 retail properties in Singapore and Malaysia.

KL Festival City Mall is a three-level shopping mall constructed on a 99-year leasehold commercial land in Setapak, Kuala Lumpur. It has a total net lettable area of some 487,342 sq ft, with a current occupancy rate of about 99%.

The property recorded an audited revenue of RM39.6 million (inclusive of rental income of RM37.4 million) and profit after tax of RM12.1 million for the financial year ended June 30, 2013.

The net book value of KL Festival City Mall was RM224.5 million, based on the audited financial statements as at June 30, 2013, while the property’s original cost of investment was approximately RM246 million. The mall was acquired by Parkson in March 2008.

In its filing with Bursa, Parkson explained that as it is embarking on the construction of premium shopping malls (with net lettable areas of about one million sq ft), KL Festival City Mall is deemed too small to drive the group’s expansion plans.

“The proposed disposal will result in a gain of approximately RM110 million. For illustration purposes, this will result in a net cash inflow to Parkson Holdings Group of approximately RM340 million, which can be utilised for investing activities in brand business and premium shopping mall development,” it added.

 

This article first appeared in The Edge Financial Daily, on August 20, 2014.

 

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