Property Investment & REIT
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Sunway Berhad Annual Report 2012 81 Property Investment & REIT Sunway’s Property Investment and REIT division owns Over the years, the division’s malls have selected a and manages a portfolio of high quality property signifi cant number of Malaysian bred retailers as assets, held either directly by subsidiaries of Sunway tenants for the available retail space, playing a crucial or through 34.4% owned Sunway Real Estate role in supporting and developing the Malaysian Investment Trust (“Sunway REIT”). Divided into the retail industry. Such eff orts have not gone unnoticed 2 main categories of Retail Assets and Commercial with Sunway Pyramid winning the Malaysian Retailer Assets, the total value of investment properties Chains Association Most Supportive Mall Award four under Sunway’s management are in excess of RM5.7 consecutive times since 2009. billion. The majority of these assets are located within integrated townships developed by Sunway and leverages upon each other to enhance their Commercial Assets attractiveness to tenants and patrons. Sunway operates a diverse range of commercial assets which ranges from office buildings like Retail Assets Menara Sunway, Sunway Putra Tower, Sunway Tower and Wisma SunwayMas to education campuses like Managing the Sunway Pyramid, Sunway Giza, Sunway Monash University Sunway Campus and Sunway Putra Mall and Sunway Carnival shopping malls, University to student accommodation like Monash Sunway is a leading mall operator in the country with University Residences and Sun-U Residences. These close to 3 million square feet of nett lettable retail commercial assets continue to attract high tenancy space. Each of the malls possesses unique attractions due to their strategic location, purpose built buildings with Sunway Pyramid being a leading regional mall and good maintenance which has resulted in an in the Klang Valley due to the diversity of its tenants, overall average occupancy rate of above 90%. varied off erings as well as themed architecture and shopping precincts which creates an enjoyable shopping experience for its patrons. Sunway Giza, REIT meanwhile, operates in a niche market catering to food and beverage connoisseurs and lifestyle Besides being the Manager of Sunway REIT, Sunway shoppers in an affl uent neighbourhood. also owns 34.4% of the largest listed REIT in Malaysia by assets under management (“AUM”). Listed since Closer to the city centre, Sunway Putra Mall is a 2011, Sunway REIT has been delivering consistent well-established shopping destination, being among dividends to its unitholders and has seen its unit the fi rst few large scale shopping malls in Kuala price appreciate by more than 60% since its initial Lumpur, and has a strategic location with its excellent public off ering (“IPO”). In turn, its AUM has grown from accessibility via LRT and KTM trains at its doorstep. RM3.7 billion during its IPO to approximately RM5.0 Currently closed for a major renovation, it is expected billion as at 31 December 2012. For the calendar year to regain its popularity after the completion of the 2012, dividends totalling 8.0 sen per REIT unit was major renovation in late 2014. Up north, Sunway declared which is approximately 13% higher than the Carnival is the leading mall on mainland Penang and previous year (2011: 7.1 sen). serves the needs of the population in the northern region of Peninsular Malaysia. Christmas showlights at Sunway Pyramid 82 Sunway Berhad Annual Report 2012 Property Investment & REIT KEY MILESTONES Asset Enhancement Initiatives (“AEI”) Drawing The Crowd To enhance and increase returns from the division’s assets, a number of AEI were undertaken during the To enhance the popularity of its retail assets, year. Firstly, to generate additional revenue by creating Sunway’s shopping malls stepped up eff orts to bring new lettable area, the podium levels of Menara in new tenants comprising established, high street Sunway were extended, adding over 14,000 square brands as well as new stores with innovative off erings feet of nett lettable area which were fully taken up to add further diversity to the tenant mix. Eff orts to immediately upon completion. The extension costs this end have led to the arrival of popular brands like approximately RM4.1 million and was completed in Zara, Uniqlo, DKNY Jeans and Gap to Sunway Pyramid. October 2012. Some of these outlets were clearly eagerly awaited as long lines formed outside Uniqlo on its opening Over at Sunway Pyramid, there was another initiative weekend and Zara’s Concept Store outlet, only the to retrofi t 8 units of chillers with higher energy third of its kind in Southeast Asia, drew rave reviews effi cient equipment to reduce energy consumption. from fashion magazines for its wider range of clothing Besides being consistent with the Group’s philosophy compared to Zara’s other outlets. of developing green and sustainable townships, the project is estimated to generate energy savings Existing tenants were also encouraged to revamp of approximately RM3.0 million per annum from an their stores and introduce new attractions. Taking on investment of approximately RM18.5 million. the challenge, Sunway Pyramid’s mini anchor, TGV Cinemas, underwent a major refurbishment and on Wisma SunwayMas had also undertaken an exercise completion, launched their fi rst ever 3D IMAX cinema to upgrade and modernise its common areas and in Malaysia. Featuring a 57 feet wide screen, the IMAX façade with the project completed in July 2012. hall possesses 2D and 3D projection capabilities and has a seating capacity for 292 cinema goers. Apart from the IMAX hall, TGV Cinemas had also introduced Strategic Acquisition other halls with new concepts such as the premium TGV Club and TGV Beanieplex, the fi rst beanbag Sunway REIT completed the acquisition of the Sunway seating cinema in Malaysia for a more casual movie Medical Centre (“SMC”) in FY2012 from the Group’s experience. healthcare division. With an initial yield of close to 6.1%, it was a yield enhancing acquisition to Sunway Meanwhile, in conjunction with major happenings REIT and added further stability to its income portfolio and festivities, the malls have organised special as the property was leased back to the healthcare events and elaborate decorations to commemorate division for an initial period of 10 years, extending the occasion and draw higher patronage. In 2012, the REIT’s weighted average lease expiry to 2.6 years this included events for the Earth Hour Countdown, and providing even better long term visibility of the UEFA Euro 2012, 1Malaysia Year End Sale, Arthurs REIT’s income. Day 2012 and celebrations for Chinese New Year, Hari Raya, Diwali and Christmas. The AEI completed for Menara Sunway Sunway Berhad Annual Report 2012 83 The acquisition had been strategic as it serves to Meanwhile, Sunway REIT is committed to continue diversify the REIT’s interest into the healthcare to grow its AUM to more than RM7 billion over the industry, which is a relatively resilient one and where next two to four years through further acquisitions. the risks of uncertainty and rental volatility associated Sunway REIT has also planned for a series of capital with most other commercial properties is much expenditure to undertake AEIs for the next two years. reduced. Following the completion of the acquisition, the REIT’s asset size grew from RM4.63 billion in June Amongst the AEIs expected is the much awaited 2012 to RM4.96 billion in December 2012, allowing refurbishment of Sunway Putra Mall which will Sunway REIT to maintain its position as the largest commence in May 2013 after the last of the listed REIT in Malaysia by assets under management existing tenants move out by end-April 2013. The in 2012 despite the listing of new REITs in the year. refurbishment is expected to be completed within 22 months with an estimated cost in the region of RM300 million. Sunway REIT has also decided to FUTURE PLANS accelerate the refurbishment for Sunway Putra Place where the refurbishment of the hotel and offi ce will In the pipeline for this division are the four new commence on a progressive basis concurrent with investment properties currently under construction the refurbishment of Sunway Putra Mall. The REIT comprising The Pinnacle offi ce tower, Sunway Pyramid Manager is in the stage of planning for the costing Phase 3, Sunway University new academic block and and scope of works for the hotel and offi ce. The Sunway Velocity shopping mall. decision to accelerate the refurbishment of the hotel and offi ce alongside the mall is to be consistent with Amongst the new properties to be constructed, The the overall strategy of rebranding and repositioning Pinnacle is expected to be the fi rst to complete by end the asset in a holistic manner. To achieve optimised 2013. The Grade A offi ce tower has been granted MSC business synergies between the hotel, retail mall and status and will have total nett lettable area of 580,000 offi ce, the clientele base should be complementary. square feet over 25 storeys. With its modern façade and IT-enabled infrastructure, the division is targeting Upon completion of the refurbishment in early 2015, to lease it to professional fi rms, multinationals and Sunway Putra Place is expected to be a landmark 3-in- large corporations. The completion of this offi ce will 1 mixed-use asset in Kuala Lumpur adding vibrancy to generate synergies to the other properties in Bandar the Kuala Lumpur shopping scene and revitalising the Sunway and in particular Sunway Pyramid shopping surrounding area into a shopping destination for local mall as it is expected to generate higher footfalls shoppers and tourists. in terms of lunch crowd and after offi ce-hours entertainment. The other properties are estimated to be completed at various times during 2015 to 2016.