Capital World Ltd, a property developer with a Singapore stock exchange listing, might finally complete its RM1.8 billion integrated development project in Tampoi, Johor Bharu, and pursue other real estate opportunities.
Singaporean retailer Mustafa has acquired 591 unsold retail units in Capital City Mall from Capital World for RM368 million as part of its entry into the Malaysian market.
The purchase amounts to 641,216 square feet of total net lettable space. In addition, it will purchase all 2181 parking spaces and 1.28 million square feet of outdoor and multipurpose space.
The 11-storey mall has 1,602 strata-title retail units with a total net lettable area of 902,994 sq ft.
It is part of the integrated development that will also include a 315-room hotel, an 18-storey tower with 630 serviced suites, and 690 serviced apartments spanning three blocks.
According to a recent bourse filing by Capital World, the proceeds from the sale will give the company the financial muscle to build and complete the remaining components of the integrated development.
The company will also pursue other real estate opportunities, including helping Mustafa identify potential sites in Malaysia and Indonesia to develop into megastores.
Mustafa, which opened its first shop in 1971, has been operating the Mustafa Centre along Syed Alwi Road in Singapore's Little India since 1995.
The investment in Capital City Mall is Mustafa's first foray into the Malaysian market.
Capital World's chief executive officer and executive director Hoo Khee Leng said having Mustafa as a key player in the integrated development is a major catalyst for the company.
"They (Mustafa) have what it takes to run a thriving retail business given that they are a household name in Singapore. We fully expect the mall, as well as the rest of the integrated development, to be well received now that international travel has resumed," he said.
Hoo said that this deal with Mustafa will also fast-track Capital World's turnaround and restore value to shareholders as it works towards getting the company's share trading suspension lifted.
According to the filing, the mall is expected to reopen in the second half of this year after being closed in February 2020 due to Capital World's financial constraints.
Capital World reported a net loss of RM3.4 million for its quarter to September 30, 2022.
The company and one of its key subsidiaries ran into financial difficulties and had to seek court protection from creditors while they restructured their debts.
One of the creditors is believed to be Gadang Holdings Bhd, which has been the company's joint venture partner since the beginning of the development.
Capital City is sited on land owned by Achwell Property Sdn Bhd (APSB), a wholly-owned unit of Gadang.
It was reported in 2020 that the total sum owed to creditors, including Gadang, by the project's developer, Capital City Property Sdn Bhd was estimated to be around RM400 million.
A settlement was successfully reached with APSB on July 28, 2021, according to Capital World's Annual Report 2020.
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