AmResearch in its report on Friday said SunREIT planned to undertake a major renovation exercise on Putra Place to enhance the property.
“The new management may terminate the contract with the current operator of the Legend Hotel and take over running of the hotel or it would tie-up with a global operator,” it said.
It added that while SunREIT has a commendable track record, especially in managing retail assets such as Sunway Pyramid, it remained to be seen if SunREIT would be able to turn Putra Place around.
“The property needs a strong pull-factor to get a decent visitor traffic as the location, although in the city, is not too favourable,” it said.
Putra Place encompasses The Mall shopping complex, the Legend Hotel and an office tower.
The purchase will also strengthen Sunway REIT's position as Malaysia's largest trust.
JPMorgan Securities (M) Sdn Bhd said the management of the real estate investment trust would only release details on profitability and acquisition yield of the property once the deal was completed.
“The group stated that this is an asset with turnaround potential but some renovation works needed to be done. We believe that this has been a low yielding assets and hence not likely to be making earnings immediately, ” it said in a report.
The real estate investment trust, a 36.7% owned associate of Sunway City Bhd, won the bid at an auction held on Wednesday through its trustee OSK Trustees Bhd.
It has 120 days to complete the purchase.
Commerce International Merchant Bankers Bhd (CIMB) put the property up for auction to recover loans given to property owner, Metroplex Holdings Sdn Bhd.
The auction price of the property was reduced thrice as no bids were received.
The property was first auctioned in April 2008 and the price was then set at RM705mil. The latest reserve value was RM513.95mil.
The Mall comprises eight levels of podium retail/shopping units. The Putra Place office tower starts from the 10th to the 33rd floor, while the 25-storey Legend Hotel includes serviced apartments and penthouses. It is located on Jalan Putra opposite the Putra World Trade Centre. The freehold property, with 193,621 sq ft space, has 1,323 parking bay.
SunREIT told Bursa Malaysia on Thursday that it aimed to provide the unit holders with exposure to a diverse portfolio of authorised investments that will provide stable cash distributions with the potential for sustainable growth.
“This involves selectively acquiring properties that meet investment criteria that will provide attractive cash flows and yields, as well as opportunities for further revenue growth through asset enhancement,” it said, adding that it saw enhancement and turnaround opportunities for the property and planned to undertake major renovation works.
It believed that the property will enjoy upside on capital appreciation as well as improved yield.
By The Star
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