Sunway REIT sees big returns from Putra Place
PETALING JAYA: Sunway Real Estate Investment Trust (REIT) Management Bhd, the manager of Sunway REIT, expects its close to RM1bil investment in Sunway Putra Place in Kuala Lumpur to contribute positively to its income with the property’s scheduled opening next year.
“We are very confident that there will be a quantum leap in earnings after the mixed development is completed and there will also be a capital revaluation potential given the NAV (net asset value) upside. This is a very positive milestone for growth in our financial numbers,” chief executive officer Datuk Jeffrey Ng told a press briefing yesterday.
Ng said post opening, the property would be a significant contributor to the trust’s net property income (NPI) to a “double-digit percentage” from 8.4% of its entire portfolio while unitholders could also look forward to a double-digit growth in distribution per unit in the financial year ending June 30, 2015 (FY15) and FY16.
Sunway Putra Place comprises Sunway Putra Hotel, Sunway Putra Tower and Sunway Putra Mall.
Total refurbishment for the property would cost RM459.2mil while the acquisition cost amounted to RM522.1mil.
“This will be our big investment. This refurbishment would allow us to reap full synergies of the three properties, and the refurbishment is expected to be completed in the first half of 2015. We will not optimise the business synergies of the three assets if we did not decide to renovate them together,” added Ng.
The mall will eventually add an additional 15% in net lettable area (NLA) to 580,000 sq ft after an architectural enhancement, space reconfiguration and an improvement in infrastructure.
Its hotel would be equipped with 497 new rooms bringing the total number of rooms to 618 while its office would have a total 317,000 sq ft in NLA with a fully-renovated lobby and common areas.
“The hotel would be fully refurbished; we have almost 500 new rooms while the remainder had already been refurbished by the previous owner. The LRT is at our doorstep and will connect to our building via a dedicated walkway,” Ng said.
Meanwhile, Ng is cautious on the overall outlook for the local property market given the rising interest rates which may mean added pressure for the managers to improve on their performance.
“We foresee the market cycles, and there is a likelihood that an oversupply will have impact on the less-than-strong property investor and developer. When this happens the asking price then would probably be more realistic,” he said.
“We will be more careful and reserved and watch what is happening in the market – this is our game plan now. It is very difficult today to get yields at 6.5% with the acquisition of a new asset. Despite being cautious we are also open to any good opportunities for asset acquisition.”