PETALING JAYA (Mar 14): Sunway REIT Management Sdn Bhd (SunREIT) plans to invest an estimated RM200 million to rejuvenate Sunway Putra Mall, said CEO Datuk Jeffrey Ng.
The investment will go towards renovating the mall and improving accessibility, he told reporters at a press briefing on Wednesday.
"SunREIT's balance sheet is very strong. We only have a gearing of 35% so fundamentally we will be funding from borrowings and at this moment sourcing for funding is based on our balance sheet strength and also our very strong cash flow.
"We've got no problem funding from the debt market. Right now, whether it is a bilateral loan or through debt papers such as bonds and all that... that's something that will be coming along the way," said Ng.
The property is expected to generate a return on investment of 12.5% to 15% per annum while the estimated incremental income per year is expected to be RM25 million to RM30 million.
The mall's net lettable area (NLA) will be increased to 620,000 sq ft from 505,448 sq ft, while its interior and exterior will be given a facelift and extra features such as more escalators.
One of the outstanding features of the mall's architecture will be the "sun drop", a transparent gem-like structure at the centre of the mall that will house most of its F&B and nightlife, said Ng.
Meanwhile, another ramp will be built to enhance traffic flow into the mall while a new focal entry point will be created at a corner of the mall, he added.
According to him, the management hopes to close the mall for 15-18 months from next year and start renovation works, while improvements on the hotel and office components will be done on a progressive basis.
Sunway IFM Sdn Bhd shopping malls COO Kevin Tan said the mall will be targeted at the mid to mid-upper income group and plans to tap into its immediate neighbours, namely Sunway Putra Tower, the Putra World Trade Centre and tourists putting up at the adjoining Sunway Putra Hotel.
Tan also deemed Kenny Hills, Damansara Heights, Jalan Duta, Jalan Ipoh, Hartamas and Bangsar as catchment areas of Sunway Putra Mall.
The mall's tenant mix will be planned to appeal to the mid- to middle-upper income group, and some of the anchors in its "Asian Avenue" zone will include an 8-screen cineplex, karaoke and a food court.
"We are talking to the major anchors now before we move on to smaller tenants. We are still awaiting the feedback from our survey, before we can firm up a lot of things," he said.
Currently, the mall has an occupancy of over 70%, while about 90% of the office is tenanted. Meanwhile, the hotel has a monthly occupancy of mid-60%, said Ng.
"As far as DPU [distribution per unit] is concerned, it will not be affected during the closure of the mall, because we have other assets that will be renewing their tenancy, and there will be new acquisitions. We will still growth as well, but once it is completed you will see a spike (in DPU). That's why we called it a turn-around asset," he said.
He noted that the Sunway Pyramid retail centre here expects up to 400 tenants to renew their tenancies in September next year.
Collectively, they take up a million sq ft out of the 1.6 million sq ft in NLA and this represents a 16% increase in tenant renewals, he added.
Ng declined to reveal if any Sunway properties will be injected into the REIT or talk about the fund's future acquisitions.
To recap, SunREIT's legal tussle began after it had successfully bid for the property at RM513.9 million at a public auction and the fund's trustee OSK Trustees Bhd had registered as the landowner at the Kuala Lumpur Land Registry on Apr 19, 2011.
Former owner Metroplex Holdings Sdn Bhd filed lawsuits against SunREIT to stop the transference of ownership, occupancy and management rights.
On Feb 20, 2012, the Federal Court had dismissed an application for leave for appeal by Metroplex Holdings.
Ng said SunREIT is claiming damages pursuant to the order of the High Court granted on June 28, 2011, and costs awarded to Sunway REIT Management and OSK Trustees.
"The former owner and its holding company as well as another bidder at the public auction and three tenants have also instituted legal proceedins, amonst others, challenging the validity of the public auction and seeking enforcement of the tenancy agreements with the former owner.
"Thus far, the High Court has decided in favour of the trustee and the manager or in some cases, struck out the cases. The repsective plaintiffs have also appealed to the Court of Appeals which appeals are pending hearing," said Ng.
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