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Saturday, May 17, 2008

Sungei Wang draws interest

Sungei Wang Plaza enjoys 100% occupancy

PETALING JAYA: Sungei Wang Plaza, a famous landmark in Kuala Lumpur’s Bukit Bintang area, is attracting attention from local and international parties for sale or joint venture to further develop its potential.

The many suitors are rumoured to include CapitaLand, which paid RM770mil for Gurney Plaza in Penang and RM430mil for the Mines Shopping Fair.

Based on its strong income and current valuations, the 60% retail and car park space owned by Sungei Wang is said to be easily in excess of RM600mil.

Back in December 2006, Landmarks Bhd had announced the sale of its stake in Sungei Wang for RM284.8mil cash to Kencana Property Management Sdn Bhd. This on a revalued net tangible asset and included liabilities.

It is believed the current owner is not all out for the sale of its stake but is keen to explore possible tie-ups with any strong party that could add value to its potential.

Sungei Wang, which was built in 1977 by Tan Sri Chong Kok Lim, has total retail and car park floor area of 1.2 million sq ft, and enjoys 100% occupancy.

Its location is said to be boosted by good feng shui and the presence of the Imbi and Bukit Bintang monorail stations.

Sungei Wang recently won The 2007 Brand Laureate Award for brand excellence in the retail shopping category.

Speculation has it that a large shopping mall real estate investment trust (REIT), exceeding RM1bil, could be in the offing, if talks with CapitaLand materialised.

But would that be enough to draw investors, given the lacklustre market? The listed REITs are already reporting fairly good results but their capital appreciation is not really reflected in their share price movement.

Maybe, observers point out, the industry can come up with a large home-grown shopping mall REIT incorporating malls with high passenger traffic and robust sales in different localities and segments. These are in the likes of One Utama, Mid Valley Megamall and Sungei Wang.

At the moment, nothing much has come out of such a suggestion. But one can never tell as someone may just sit up and decide to propose a very exciting and diversified proposition.

Sungei Wang itself, together with Andaman Resort in Langkawi, was the subject of a potential REIT. However, the plan was called off by Landmarks, following the entry of North Symphony Sdn Bhd and Genting Bhd as major shareholders.

“Sungei Wang has potential for further capital appreciation due to two reasons – location and trade mix,” said Tan Hai Hsin, managing director of Henry Butcher Retail.

“Decentralisation of shopping centres over the last 10 years in the Klang Valley has not affected the business of Sungei Wang.

“Sungei Wang’s unique selling point is sustainable. It is difficult to be duplicated elsewhere,” he added.

Whether Sungei Wang has potential for REIT is debatable. “It is a strata-titled shopping centre. Its potential for capital growth is high, but will not be as high if it is owned by a single owner,” Tan said.

By The Star (by Yap Leng Kuen)

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