This project's mall got EPF backing. A Quill rises from Vision City
By JOHN LOH | The StarBiz | Updated: Monday July 1, 2013 MYT 12:44:20 PM http://www.thestar.com.my/Business/Busines...or-RM12bil.aspx
PETALING JAYA: Vision City, one of Kuala Lumpur’s most prominent failed landmarks, is abandoned no more.
Widely-panned as an eyesore on the level of Plaza Rakyat, Vision City is being revived as the RM2.5bil Quill City, a 7-acre mixed development on Jalan Sultan Ismail.
Anchoring the development is the 6-storey Quill City Mall, whose highly visible, half-built shell had lay disused for the better part of a decade. Quill City will also feature a residential and an office tower.
Although slated to open in time for Hari Raya next year, the mall has already pre-leased more than 50% of its space, Quill group executive director Datuk Michael Ong told StarBiz.
“People still think the place is abandoned, but it’s all happening inside. We’ve been banging away for the past six months,” he said in an interview.
The privately-held Quill has a lot riding on this project, not least because it has agreed to sell the mall in its entirety to the Employees Provident Fund (EPF) for up to RM1.2bil, or RM1,561 per sq ft.
This is believed to be EPF’s first purchase of a retail mall in Malaysia. The pension fund had accepted the offer to buy the mall in December 2011, followed by the signing of the sale and purchase agreement in March this year.
The sale is subject to certain “performance targets” such as physical completion within three years and a minimum occupancy of 70% within 12 months of commercial operations, according to a RAM Ratings report in March.
EPF and Quill Retail Malls Sdn Bhd, the unit set up by Quill to undertake the development of Quill City Mall, will also enter into a type of sale and leaseback arrangement that would allow Quill to manage the mall under EPF’s ownership.
The plan entails Quill leasing the mall for three terms of three years each at incremental annual lease yields.
Quill Retail Malls had earlier this year gotten Danajamin Nasional Bhd, DBS Bank Ltd and United Overseas Bank (Malaysia) Bhd to co-guarantee a RM700mil bond issuance for project financing.
RAM Ratings said in a ratings announcement last October that the repayment of the debt would mainly be derived from the sale proceeds of the mall to EPF.
Quill City Mall marks the first large-scale retail venture for Quill, which made its name building custom offices for multinationals and selling luxury marques including Rolls-Royce and BMW.
As the focal point for Quill City, the mall will take up the bulk of the project at 60%, or 4 acres. Quill City Mall has an approved gross floor area of 1.35 million sq ft and net lettable area of 770,000 sq ft. It has so far secured three anchor tenants comprising a department store, cineplex and supermarket.
Ong said the department store was set to be the mall’s biggest tenant, occupying four levels and 230,000 sq ft.
Whilst this could not be confirmed, it is believed that Quill had beat out the likes of Eastern & Oriental Bhd and Singapore’s UOL Group Ltd in the bid for Vision City in 2007.
Quill paid RM430mil for the remaining unsold and partially completed properties from a unit of the then Rashid Hussein Bhd (RHB).
RHB had sold a parcel of land for a fourth office tower, a half-built retail centre with four levels of basement parking and a partially completed apartment block with or retail podium with four levels of basement parking. The project came with a pre-approved development order from City Hall.
In 1995, RHB Daewoo acquired 11.5 acres of land for Vision City. It managed to sell three office towers at the site before the company ran into financial difficulties during the Asian financial crisis.
Despite its tumultuous past, the new owners are unfazed.
Quill City Mall, which would boast the longest street frontage for a retail centre in the country at 300m and a link bridge to the Medan Tuanku monorail station, has received “strong enquiries” from potential retailers, Ong said.
Previous studies showed that some 300 retailers were not represented in the immediate area.
Its leasing managers aimed to benchmark rentals to 1Utama, Mid Valley and Sunway Pyramid, according to Ong.
Quill has opened lease applications to prospective tenants for retail lots ranging from 800 to 1,000 sq ft, although it has received enquiries for larger sizes, he added.
The mall, targeting the mass market, has a ready catchment of 5,000 people from the existing 30-storey offices connected to it that were built and sold by RHB Daewoo.
Quill plans to launch the residential component sometime next year and a 40-level office tower later. Quill Residences, at 36-storeys, comprises 552 units starting at 660 sq ft and RM1,300 per sq ft, giving the smallest units a price tag of close to RM1mil.This post has been edited by accetera: Jul 1 2013, 11:04 PM