This article first appeared in Corporate, The Edge Malaysia Weekly, on June 6 - 12, 2016.
PROPERTY developer cum owner and operator of hotels and malls Mammoth Empire Holdings Sdn Bhd (MEH) is ready to divest Empire Shopping Gallery in Subang Jaya, Selangor, should it receive a desirable and concrete offer.
MEH is involved in several developments in the Klang Valley, including the ongoing Empire City Damansara and the upcoming Empire City Damansara 2, located along Lebuhraya Damansara-Puchong (LDP).
Although MEH has been around since 2002, the group only became well known in 2010 following the opening of two commercial assets — Empire Shopping Gallery and Empire Hotel. The group is helmed by Datuk Sean Ng Yee Teck, who is the group managing director, and Datuk Danny Cheah, the group executive director.
A company spokesman says Empire Shopping Gallery has attracted offers from several parties.
“We have been approached by several interested parties since the mall opened six years ago. The possibilities [to sell the asset] are always there. If the price and terms and conditions are favourable, we will seriously consider it,” the spokesman says, responding to questions from The Edge on whether MEH is putting the mall up for sale. “We have no concrete offers [yet].”
Empire Shopping Gallery has a gross built-up of 600,000 sq ft and a net lettable area of 350,000 sq ft spread over five levels. It enjoys 98% occupancy and its retail tenants include Tang’s, Jaya Grocer and Toys “R” Us. Its food and beverage tenants include Din Tai Fung and La Bodega.
“We had a valuation done for Empire Shopping Gallery two years ago. It was valued at RM510 million. The latest valuation is RM583 million,” the spokesman says, adding that the shopping centre’s tenancy agreements were renewed only recently.
The mall is six years old and tenancy agreements are typically renewed every three years. According to the spokesman, the mall, which has a rental yield of between 6.5% and 7%, receives 6.5 million shoppers a year.
A valuer contacted by The Edge, who declined to be named, says under current market conditions, a 6% yield is considered good, given that the fixed deposit rate is about 4%.
The holding company of Empire Shopping Gallery is Couture Homes Sdn Bhd. A search on the Companies Commission of Malaysia website reveals that the latest financial report filed by the company was for the financial year ended Dec 31, 2014. In FY2014, Couture Homes posted a net profit of RM16.63 million on revenue of RM45.85 million. As at end-December 2014, its accumulated profit stood at RM41.98 million and total liabilities amounted to RM252.25 million (current liabilities: RM124.12 million).
Apart from Empire Hotel, Empire Shopping Gallery is linked to Empire Soho and Empire Tower. It is worth noting that the mechanical and engineering components of the assets are separate, which makes it easier to sell the mall and hotel individually.
When asked if Empire Shopping Gallery is the company’s cash cow, the spokesman replies, “It provides us with recurring income.”
Empire City Damansara, located opposite PJ Trade Centre along the LDP, is a 28-acre integrated development comprising offices, hotels and retail outlets with a GDV of RM5 billion.
The spokesman says some retailers have requested the opening of the mall be delayed, given the current weak consumer sentiment. As such, the mall will be opened in stages.
One of the two planned hotels at Empire City — Marriott Hotel and Autograph Collection — “will open within a year”, in time for the 29th SEA Games ice skating event in August next year. Empire City has been chosen as the venue for the games’ first-ever winter sport.
Apart from Marriott Hotel and Autograph Collection, which are both Marriott International Inc hotel brands, a third Marriott brand will make its debut at Empire City. The Ritz-Carlton will be built on a four-acre site next to the ongoing project. The 53-storey tower will offer 288 luxury rooms and suites.
Yet another project being undertaken by MEH is the 300-room Wolo Chinatown. “The tenants have just vacated the building, but we will take our time to do it,” says the spokesman. The building, previously an office block (Bangunan Hong Leong, which was later renamed Wisma Megah), is located at the junction of Jalan Tun H S Lee and Jalan Tun Tan Cheng Lock.
MEH also operates Wolo Bukit Bintang, which is also a former office building (Wisma KLIH). It is located at the junction of Jalan Bukit Bintang and Jalan Sultan Ismail.
As for the Empire City Damansara 2 project, which will be located across the highway from Empire City Damansara and on the same side as PJ Trade Centre, the spokesman says it will occupy 65 acres and is expected to be launched at the end of the year. As it is double the size of the first phase of Empire City Damansara, its GDV is expected to be in excess of RM10 billion.
Empire City Damansara and Empire City Damansara 2 will be connected by an overhead bridge to serve pedestrians and motorists.
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