This article first appeared in The Edge Malaysia Weekly on May 29, 2023 - June 4, 2023

PROPERTY developer UEM Sunrise Bhd (UEMS) is expected to sign a deal to buy Giant Mall in Kelana Jaya, Petaling Jaya, Selangor — located off the Damansara-Puchong Expressway — from the Employees Provident Fund (EPF) for more than RM150 million, sources say.

It is learnt that UEMS plans to demolish the building and redevelop the site, which measures nine acres.

The parties, sources say, are at the tail end of their negotiations and a deal may be signed as early as this week.

When contacted, the EPF tells The Edge, “At this time, we are unable to provide a comment on this specific matter.” UEMS did not respond to questions sent by The Edge.

This is set to be the eighth retail asset to be sold by the EPF this year that is, or was, previously occupied by retailer Giant. Including this sale, the total value of the assets disposed of so far this year would amount to over RM880 million.

As for UEMS, which has a stronghold in Johor, it will be the developer’s second sizeable land purchase in PJ. In 2021, UEMS’s wholly-owned unit UEM Land Sdn Bhd purchased 9.93 acres of leasehold factory land and buildings from Dutch Lady Milk Industries Bhd in Section 13, PJ, for RM200 million. At the time, UEMS CEO Sufian Abdullah said that the acquisition bodes well with its ongoing efforts to rebalance the group’s portfolio and increase its foothold in the Klang Valley.

“The Giant [Mall] in Kelana Jaya was valued at between RM140 million and RM150 million. The buyer is paying a premium on the valuation,” a source tells The Edge.

Previously known as Giant Hypermarket Kelana Jaya, the store — located in Jalan SS6/12 — opened its doors in 2004. It sits on a nine-acre freehold site with 1,000 parking bays and has a trading area of 7,400 sq m. This store is not to be confused with Giant Supermarket, Kelana Jaya located in Jalan SS6/3, which is also owned by the EPF.

One valuer, who declined to be named, says the indicative value for the land zoned as commercial is RM400 psf while a property consultant pegged it at RM350 psf.

Sources say that UEMS is buying the land to redevelop it. A valuation of RM150 million would mean that the 392,040 sq ft land may be sold for at least RM420 psf.

Last month, The Edge reported that the EPF was in the process of disposing of a seventh retail outlet, previously occupied by Giant, in Klang Sentral, to NSK Trading Sdn Bhd for an estimated RM60 million.

This followed the disposal of six retail assets located in the Klang Valley and Johor — Giant Superstore Ulu Klang, Giant Hypermarket Bandar Kinrara, Giant Hypermarket Putra Heights, Giant Hypermarket Klang, Giant Hypermarket Subang Jaya, USJ and Giant Hypermarket Plentong — worth a combined RM520 million, to Sunway Real Estate Investment Trust (Sunway REIT) in March.

It is worth noting that during Question Time in parliament last Wednesday, it was revealed that the EPF had made RM46 million in profit from the sale of the six retail assets to Sunway REIT.

These Giant-store assets form part of a larger portfolio of buildings and shoplots acquired by the EPF from Giant’s former owner, GCH Retail (M) Sdn Bhd, which is part of Hong Kong’s DFI Retail Group. In 2005, GCH sold Hartanah Progresif Sdn Bhd which held a portfolio of assets — comprising four hypermarkets, four supermarkets and 42 small shoplots and hostels as well as three pieces of vacant land — to the EPF for RM382 million with a guaranteed net yield of 7.5% a year, equivalent to RM32 million. GCH Retail had also entered into a separate long-term lease agreement of 10 to 15 years for the properties.

However, in more recent years, GCH Retail shuttered dozens of loss-making stores and in February sold the business to a local group.

Meanwhile, while earlier talks suggested that Giant Mall in Kelana Jaya may be vacating the premises by year end to make way for redevelopment, sources say that the retailer and the tenant are negotiating a deal for Giant to lease the site and pay UEMS rent, pending a decision to redevelop the site.

It will be interesting to see if the Kelana Jaya land, which is similar in size to the Dutch Lady Industries land — on which is expected to be built a mixed-use development with a gross development value of RM1.3 billion — will see a project of a similar size rise on the site.

In April, The Edge reported that UEMS had placed a portfolio of assets up for sale in Kuala Lumpur, comprising hospitality retail, parking bays and district cooling systems, that could possibly fetch as much as RM1 billion. UEMS said at the time that it was rebalancing its asset portfolio as part of the “Triage” stage of its three-phase strategic turnaround plan, introduced towards the end of 2021, in anticipation of an improving economy as the nation adjusted to the Covid-19 pandemic environment. 

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