The Store buys Alor Star Mall for RM130m

KUALA LUMPUR: The Store Corporation Bhd is proposing to acquire Jurus Kota Sdn Bhd, which owns the Alor Star Mall in Kedah, from YS Tang Holdings Sdn Bhd for RM130 million in cash.

Under the agreement announced yesterday, The Store would also assume the liabilities of RM43.91 million which Jurus Kota owed to YS Tang as at Dec 31, 2006.

The Alor Star Mall is a two-storey commercial complex with mezzanine floor and basement car park.

The mall has a net lettable area of about 296,532sq ft with 386 car park bays. The mall started operations in 2004 with the major tenant being Pacific Hypermarket and Departmental Store Sdn Bhd, a subsidiary of The Store.

The Store said the acquisition would be financed from its own funds and/or bank borrowings.

“The Store Group will be able to increase its revenue base through recurring rental income from the Alor Star Mall, which will complement The Store Group’s existing retailing income,” the company said.

It would also be able to enjoy rental savings, which would otherwise be incurred by the Pacific outlet, which occupied 72% of the total lettable area of the Alor Star Mall. It expected the acquisition to be completed by the end of first quarter of 2008.

YS Tang had also provided a warranty that the net tangible assets (NTA) of Jurus Kota as at Dec 31, 2007 would be at least RM133.28 million as in the audited NTA as at Dec 31, 2006.

Jurus Kota posted RM1.79 million in net profit on the back of RM8.54 million in revenue for the audited financial year ended Dec 31, 2006. In FY05, net profit was RM2.85 million and revenue at RM6.62 million.

According to The Store, the rental revenue per annum from the mall was about RM10.5 million per annum, based on existing rental rates. About 86.9% of the building was occupied.

The Store’s bank borrowings are expected to increase from RM199.36 million to RM329.36 million after the proposed acquisition, which would see its gearing ratio increase from 0.76 times to 1.25 times.

By The EDGE MALAYSIA (By Kevin Tan)