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Thursday, 19 January 2017

(The Star) Sale of prime asset to Pelaburan Hartanah yet to be completed

Sale of prime asset to Pelaburan Hartanah yet to be completed
PETALING JAYA: The Mammoth Empire group failed to meet its target of divesting its Empire Shopping Gallery by the end of last month, a move that would have given the group its much-needed cash injection.
According to sources, Pelaburan Hartanah Bhd (PHB) was tipped to acquire the mall, which is considered Mammoth Empire’s cash cow, for about RM570mil.
“Banks were expecting it to be completed by the last week of December, but it did not happen. It is unclear why the developer has been unable to wrap up the deal so far,” said a source.
It is learnt that the developer needed to dispose a part of its wide asset base to ease the financial obligations towards several financial institutions.
PHB declined to comment when contacted.
Meanwhile, bankers said the group’s underlying assets were good to the extent that a local investment bank was prepared to do an RM4bil bond issue.
“The assets as a whole are good and are in prime locations. The only problem now is that the property market is soft and there is a wait-and-see attitude,” said a banker.
The price tag for the Empire Subang Gallery is deemed as fair because the adjacent Subang mall is valued at about RM580mil.
PHB is a real estate investment holding company and a unit of Yayasan Amanah Hartanah Bumiputera, which has been on a property binge in the last several years.
According to sources, Mammoth Empire Holdings Sdn Bhd (MEH) has been trying to divest its Empire Shopping Gallery, which is part of a mixed integrated commercial development comprising SoHo (small office, home office) units and a four-star hotel, for a few years in order to raise money for the completion of the 28-acre Empire City project in Damansara Perdana, Petaling Jaya, which fronts Lebuhraya Damansara-Puchong.
Ironically, PHB has also invested in an office block, known as Block H, one of 12 blocks in work-in-progress Empire City.
The Mammoth Empire group is undertaking the 28-acre project in one swoop instead of on a staggered basis. That development has been a series of starts-and-stops the last couple of years.
About two years ago, the group held a “Party of the Century” with a huge banner on one of its 12 blocks with American socialite Paris Hilton as guest.
The party took place, Hilton came, but the mall’s opening was postponed a few times after that.
Group executive director Datuk Danny Cheah had said in an interview last year that retailers had requested the group to postpone its opening. The group’s managing director is Datuk Sean Ng Yee Teck.
Interest in the group’s Empire Shopping Gallery in Subang has attracted offers from several parties, with interest becoming more intense the last couple of years.
The spokesman said the possibilities to sell the asset are “always there ... if the price and terms and conditions are favourable”.
The shopping gallery, with a gross built-up area of 600,000 sq ft and a net lettable area (NLA) of 350,000 sq ft over five levels, is more than 95% occupied and has a rental yield of between 6.5% and 7%.
Although MEH has been around since 2002, the group only became known in 2010 following the success of the Empire Shopping Gallery in Subang Jaya.
Because of the success in Subang Jaya, the group’s launch of Empire City Mall in Damansara Perdana met with good response. However, there have been several complaints by unit buyers in the last one year on the project not meeting expectations.
Besides having to meet its financial obligations towards banks, the group’s Empire City mall is also a SEA Games venue for its first-ever winter sport, figure skating and ice hockey. It has planned for an Olympic-sized skating rink in the mall.
The SEA Games is in August this year, another deadline for MEH to meet.
PHB’s investment in the work-in-progress Empire City is an office block with an NLA of 239,253 sq ft and 319 parking bays.
PHB was established on May 8, 2006 with the aim of boosting bumiputra ownership in prime commercial real estate assets in Malaysia.
Its core business is to strategically acquire and sensibly develop properties at prime locations in Malaysia to generate affordable and sustainable long-term wealth creation to its Amanah Hartanah Bumiputera unit trust holders.
Part of its business includes the leasing of prestigious office space to corporate clients.
According to its website, PHB has been actively and prudently acquiring prime commercial real estate and has accumulated property assets worth over RM5bil to date.
Its list of investments stands at 22, out of which 18 are completed property projects located around the Klang Valley with a total floor area of 7,058,399 sq ft.
The bulk of its investments are in office buildings, with several retail assets and hospitals in its portfolio.
The firm is reportedly said to be looking to widen its asset base for recurring income to include car parks and educational institutions.
Its other property under construction is Tower 6@Sky Park, located in Persiaran APEC, Cyberjaya, a 20-storey office building with an NLA of 178,327 sq ft and 178 parking bays.

Another is D Pristine Tower@Medini Nusajaya. Iskandar Malaysia, which it bought last year for RM373mil, or RM725 per sq ft on an NLA basis.