IT has been almost 10 months since the redeveloped Jaya Shopping Centre (JSC) in Section 14, Petaling Jaya, opened but tenants say they are struggling and contend that the neighbourhood mall could perform better.
Retailers in the mall say they would like management to review the rental agreement and a couple have said they are prepared to move out if things do not improve.
Widely reported as PJ’s most-awaited shopping centre while it was still under construction, the mall — which was previously known as Jaya Supermarket — was bought by CIMB-Mapletree Real Estate Fund 1 (CMREF 1) in 2006 for RM115 million. It was demolished in 2009 as part of a plan to give it a complete makeover. The mall is owned by Jaya Section Fourteen Sdn Bhd, which in turn is owned by CMREF 1 Sdn Bhd.
CMREF 1 is managed by CIMB-Mapletree Management Sdn Bhd, which is a 60:40 joint venture between CIMB Real Estate Sdn Bhd and Mapletree Capital Management Pte Ltd. The latter is a wholly-owned subsidiary of Singapore’s Temasek Holdings Pte Ltd.
Tenants that The Edge spoke to claim that they were informed that there would be 80% occupancy on the day of the opening, but were disappointed to note that it was less than half that. They say that even now, occupancy has not reached 80%.
But as recent as two weeks ago, an article stated that occupancy at the mall was over 80%.
According to Mapletree Capital Management’s 2013/14 annual report, JSC was 80% pre-leased prior to its reopening. It has seven floors of retail space offering 270,000 sq ft of net lettable area (NLA).
A visit to JSC reveals that the higher the floors the bigger the number of unoccupied lots. TGV Cinemas has yet to commence operations while there is a food court on the top floor, next to the management office, which does not have a single tenant. Children’s play zone Kidz Fun Mania has posted a notice that says, “Sorry, we are temporarily closed for renovation.” It had opened only a few months ago.
A retailer who was a tenant in the old Jaya Supermarket and has now returned to JSC says his outlet used to perform better previously. “Our rent is up 40% but our sales are down 50% [compared with before].”
Another retailer who has also returned to JSC has the same complaint — his sales are down 30% to 40%. He says if his store does not get a discount on rent, “we don’t mind closing the store to narrow our losses”.
In fact, The Edge has learnt that several tenants had not paid any rent since JSC opened until after they received a lawyer’s letter in December last year. A legal document addressed to a tenant, sighted by
The Edge, revealed that a letter of demand for the arrears and cost of issuing the demand letter had been sent by law firm Christina Chia Law Chambers.
Following the legal notice, it is understood that many of the retailers settled some, if not all, of the amount that was due, citing poor performance as a result of low traffic for not paying the rent. One tenant even managed to obtain a 50% discount while another says he was exempted from rent until September but was asked to pay in full from October last year.
To a question on whether the emergence of new shopping centres in the vicinity was making the environment tough for JSC, a chain store retailer there says he does not think Jaya 33 or Plaza 33 are competitors to JSC. “Thirty years ago, Jaya Supermarket was the only mall [in PJ]. Today, it is possibly the smallest in PJ. Why should consumers come here when they can go to other malls nearby, which are larger?” he asks. He hopes JSC’s management will be proactive in first bringing down the rent and second, offering more promotions to draw consumers.
CIMB-Mapletree Management CEO Raja Noorma Raja Othman, when contacted for clarification, says: “JSC, still in its first year of operation, continues to ramp up efforts to promote the mall to the public. Management and our tenants have been actively holding attractive promotions and exciting events to create a buzz amongst mall-goers and to draw more traffic.
“We are pleased to announce that TGV Cinemas will be launched and is expected to be fully operational this coming Chinese New Year period. This will certainly be a pull factor for JSC, given that it is strategically located in the heart of Petaling Jaya and is close to surrounding offices, schools and residential areas.”
Tenants tell The Edge that the cinema was scheduled to open before Christmas. It was later said that it would open around New Year’s Day. The cinema was one of the first tenants to sign up in early 2013.
“Moving forward, we will continue to focus on enhancing the tenant mix and to roll out more exciting marketing and promotional activities. We are fully committed to providing our full support to our tenants. We, however, regret that we are unable to comment on questions pertaining to confidential commercial terms,” Raja Noorma points out.
Just two weeks ago, Jaya Section Fourteen director Ismail Ani Arope was quoted as saying that JSC’s average traffic was 4,500 per month upon its opening and that this had reached 9,500 by end-December. His target is to lure 15,000 shoppers a day.
According to a search of Jaya Section Fourteen on the Companies Commission of Malaysia website, in the financial year ended Dec 31, 2013, the mall’s accumulated losses stood at RM107.31 million while its current liabilities were RM232.06 million.
Upon acquiring JSC, CMREF 1 invested another RM285 million in rebuilding it and doubling its NLA from 136,000 sq ft. The mall, which can accommodate 150 tenants, also offers 780 parking bays over four basement levels.
CMREF 1 reached its final close in 2005 with committed capital of RM402 million. JSC is 1 of 13 investments by this fund. Following investor approval, the fund life of CMREF 1 was extended for another two years to December 2015. The fund is now in its divestment phase.
This article first appeared in The Edge Malaysia Weekly, on February 9 - 15, 2015.