New lease of life for SStwo Mall

This article first appeared in The Edge Financial Daily, on September 3, 2018.
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KUALA LUMPUR: AsiaMalls Sdn Bhd, which has been seeking a buyer for SStwo Mall in Petaling Jaya for about three years, is understood to have finally found one.

According to sources, the suburban shopping centre has been bought by Puchong-based DK Group of Companies for an estimated RM180 million.

The Edge Financial Daily learnt that the deal was completed at the end of July.

Sources said the mall was sold at below what the owner had sought at between RM200 million and RM250 million, but at par with its construction cost.

When contacted, a representative from DK-MY Properties Sdn Bhd, the property arm of DK Group of Companies, said it was still too early to disclose the terms of the sale and its plans for the mall.

SStwo Mall was permanently closed in March 2015 due to poor performance.

It was reported then that the owner planned to undertake a redevelopment and rebranding exercise. Initial reports indicated that the owner had planned to redevelop the mall by demolishing a portion of the structure and building a serviced apartment block.

Subsequently, it was decided that the asset would be sold. In 2016, The Edge Malaysia weekly reported that the owner had, apart from selling the asset outright, considered the option of forging a joint venture or even an asset swap.

SStwo Mall, with a gross floor area of 700,000 sq ft and a net lettable area of 460,000 sq ft, was built on 3.16ha of land.

The mall opened for business in 2010 and closed down less than four-and-a-half years later.

SStwo Mall is owned by SStwo Mall Sdn Bhd, which in turn is wholly-owned by AsiaMalls. AsiaMalls was set up to handle the assets held by Asian Retail Mall Fund II, which is managed by PGIM Real Estate, formerly known as Pramerica Real Estate Investors — the real estate investment business of PGIM Inc, the global investment management business of New York-listed Prudential Financial Inc.

A search with the Companies Commission of Malaysia (SSM) showed that SStwo Mall Sdn Bhd has not filed its financials since its closure in 2015. Based on the last available submission to SSM, the company made a loss each year since its opening and chalked up accumulated losses of RM188.73 million in the financial year ended Dec 31, 2015.

Total liabilities as at Dec 31, 2015 were RM162.87 million.

This is not the only property sold by PGIM Real Estate at below its asking price. Last Wednesday, KIP Real Estate Investment Trust (KIP REIT) announced that it was buying the AEON Mall Kinta City, a four-storey building, 60,230 sq m property in Jalan Teh Lean Swee, Ipoh, Perak from PGIM Real Estate for RM208 million.

The 21-year-old building has a valuation of RM220 million based on the valuation performed by C H Williams Talhar & Wong Sdn Bhd on Aug 17, 2018 and a net book value of RM253 million as at Dec 31, 2017, KIP REIT said.

Another mall that PGIM Real Estate plans to sell is Seremban Prima (formerly Seremban Parade) in Negeri Sembilan.

DK Group of Companies was founded by Danny Koek Tiang Kung. It is also known for the motor vehicle leather upholstery products marketed through DK Leather Corp Bhd.

DK-MY Properties was established in 2004. Last October, EdgeProp.my reported that the group had 18.2ha of land bank in the Klang Valley with an estimated gross development value (GDV) of RM4.8 billion.

Its first project was DK Senza, a resort style living, launched in 2010 and subsequently D’Latour.

Both projects are located in Bandar Sunway. Last year, it launched DK Impian, a project in Section U5, Shah Alam, a 14-storey project located on a 0.97ha site with a GDV of RM285 million.

DK-MY’s latest property project is D’[email protected], a mixed development comprising shop units and office suites, a corporate office tower and a block of small-office home-office units. The project, with an estimated GDV of RM850 million, is located on 1.21ha freehold land in Jalan Duta, Kuala Lumpur.