SunREIT to double the value of Putra Place

KUALA LUMPUR: Sunway REIT Management Sdn Bhd, the manager of Sunway Real Estate Investment Trust (SunREIT), expects to increase the value of Putra Place to more than RM1 billion after refurbishment and rebranding exercises

SunREIT acquired Putra Place in Jalan Putra, Kuala Lumpur after it won a bid in a public auction in April this year for RM513.95 million. The property, which comprises a shopping mall, a hotel and an office tower, was valued at RM523 million — the mall at RM224 million, the office tower at RM81 million and the hotel at RM218 million.

“SunREIT had acquired Putra Place as it was deemed a yield-accretive asset that meets our investment criteria to benefit our unit holders,” said Tan Sri Jeffrey Cheah, founder and chairman of the Sunway Group during a media briefing yesterday.

The property will be renamed Sunway Putra Place, of which the three components will be known as Sunway Putra Hotel, Sunway Putra Tower and Sunway Putra Mall.

Addressing the issue of the existing tenants, David Lingam from David Lingam & Co, its legal counsel for the case said, “Even though we are not legally bound to the tenancies, we have taken a humane approach to the matter. We have written to the tenants inviting them to discuss the matter with us.”

He added that SunREIT has offered to enter into fresh tenancies for the duration of the unexpired portion of the previous tenancies at the same rental rate, and are willing to waive the requirement to pay deposit.

Cheah (right) says SunREIT has acquired Putra Place as it is deemed a yield-accretive asset.

“We will also give them a three months’ notice period in the event that we need to take possession of the property for the purpose of refurbishment. A majority of the tenants have responded positively but a few have taken us to court,” said David.

SunREIT has been involved in a legal tussle with the previous owner Metroplex Holdings Sdn Bhd since its acquisition in April, which saw three lawsuits filed against SunREIT by Metroplex to nullify the sale of Putra Place. In one of the cases, Metroplex has sought interim injunctions pending the final decision but the High Court has refused to grant these interim injunctions on the basis that SunREIT is the owner of the property. On June 28, SunREIT obtained a court declaration that it is the rightful owner. The High Court has ordered Metroplex to deliver possession at noon today.

Cheah expressed his surprise at the lawsuits, saying the acquisition was done according to law and the full purchase price paid, and the title registered at the Kuala Lumpur land registry on April 19.

“While we are keen to immediately start working on the turnaround exercise following the full payment of the purchase price in the interest of fulfilling our responsibility to SunREIT’s unit holders, we had also taken every step to ensure that we follow the proper legal procedures and have ensured full compliance of all rules and regulations, from the time of the public auction, while dealing with the court cases to establish legal ownership and to rightfully gain possession of the property,”said Cheah.

Meanwhile, Datuk Jeffrey Ng, CEO of Sunway REIT Management expects a period of nine to 12 months to study and refurbish the property accordingly.

He revealed that the mall currently enjoyed an occupancy rate of 80%, and the office tower is almost fully occupied while the hotel runs at an average 60% occupancy.

“We have every interest to ensure that the transition occurs with minimal disruption while ensuring the well-being of all visitors, tenants and management. The High Court’s recent declaration and rejection of the interim measures taken by the previous owner to challenge the sale, further clarifies our legal ownership and we hope that all the stakeholders involved, including the tenants, will be clear on the ownership status and cooperate with us to ensure a smooth transition, which I trust will be to our mutual benefit,” said Cheah.

This article appeared on the Property page, The Edge Financial Daily, July 1, 2011.

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