Plan to rejuvenate Suria KLCC Mall to benefit KLCC Stapled Group

KUALA LUMPUR: KLCCP Stapled Group is set to undertake a RM50 million redevelopment plan for its 60 per cent owned Suria KLCC Mall after the one its retail anchor tenant, Parkson, indicated that it would not be renewing its lease.

The three-floors that is was occupied by its former tenant Parkson is equivalent to 124,435 square feet or 12 per cent of Suria KLCC’s net lettable assets, and the redevelopment project is expected to be completed in phases by the fourth quarter of 2019 and the second quarter of 2020.

According to the research arm of Affin Hwang Investment Bank Bhd (AffinHwang Capital), the redevelopment project will add in over 50 mixed retailers in the new space and will generate higher retail yield and uplift the vibrancy of the shopping mall.

The space is understood to be leased to F&B, cosmetics, fashion and luxury brand retail tenants.

“KLCC’s chief executive officer and executive director Andrew Brien said the former ground floor area will be filled with new al-fresco cafes, cosmetics and some luxury brands.

“On the first floor, the new tenants will be both local and international emerging brands, and some areas will be curated to house pop-up stores of entrepreneurial brands.

“The second floor, which house the Signatures Food Court, will be entirely redeveloped and extended to have up to 30 F&B outlets from the current 25 premises,” reported the research arm.

Overall, AffinHwang Capital is positive on the redevelopment plant as it generates high return on investment (ROI) and is expected to lift up Suria KLCC’s gross rental.

“Parkson has reportedly contributed to about 2.4 per cent of Suria KLCC’s total gross income per annum.

“We estimate its gross rental at RM7 to 8 psf per month, is significantly below Suria KLCC’s average of RM30 to RM32 psf per month.

“Nonetheless, the overall uplift to KLCC’s profit after tax and minority interest (PATAMI) is not expected to be significant due to its large asset base, taxation and 60 per cent ownership in Suria KLCC.

Upon completion of the redevelopment, the research guided that they expect KLCC’s PATAMI to rise by two to three per cent while the new tenants will attract more footfall to the mall, compared to Parkson.

Affin Hwang Capital maintains their hold call on KLCC Stapled Group with an increased target price of RM7.77 from RM7.55.