IGB, Southkey to raise financing up to RM1 bil in nominal value via MTN

KUALA LUMPUR (Oct 27): IGB Corp Bhd and Southkey City Sdn Bhd announced today that they will be raising financing up to RM1 billion in nominal value via a medium term note programme (MTN Programme) through its joint-venture company, Southkey Megamall Sdn Bhd (Southkey Megamall).

The MTN Programme will see the issuance of medium term notes to be denominated in Malaysian ringgit which will be utilised, among others, to part finance the development and construction of Mid Valley Megamall, Southkey. 

"The MTN Programme will allow us to realise Mid Valley Megamall, Southkey as one of Johor's latest integrated retail and commercial development as well as to diversify our funding sources further in order to support the growth of IGB's business," said IGB Corp group managing director Datuk Seri Robert Tan.

A lodgement in relation to the MTN Programme was successfully made to the Securities Commission Malaysia by Southkey Megamall on Oct 27 and the eight year MTN Programme is not rated.

Mid Valley Megamall, Southkey has an estimated 140,000 sq m of net lettable area and the retail mall is expected to be opened to the public by the end of 2018.

Commenting on whether the mall will do well when it opens, Tan mentioned that there is one million sq ft of office space which will drive traffic to the mall just like in Mid Valley Megamall in KL which has three million sq ft of office space.

"These will be back offices which will attract Singapore, international and even local companies to rent. In Singapore, their office rental is approximately S$70 (RM210) psf, but here [in Southkey office towers], the estimated rental I am looking at is maybe around RM4 to RM5.50 psf. If I can achieve an offering at that rate, I will be very happy," said Tan.

Tan noted the surrounding population of Johor Bahru as well as Singapore will also drive traffic to the mall.

"In the radius of 3km, we have the Johor Bahru town population which is about close to 750,000 people. If we include Singapore, we have a catchment of four to five million people. However, the most important thing is the spending power, not the amount of people. Similar to Mid Valley KL, this will attract the middle class range of consumers", said Tan. 

"I expect the mall to do about 70% to 80% as well as Mid Valley and The Gardens Mall in KL," Tan added.

Tan also noted that there will be a three to four star hotel in the mixed development which will comprise 650 rooms and there will be another four to five star hotel comprising 450 rooms.

The shopping mall consists of six levels of retail, two levels of basement car parks and eight levels of elevated car parks. It is part of a larger RM6 billion integrated mixed development by Southkey Megamall which comprises three hotels, four office towers and one serviced apartment.