UDA to lose BB Plaza rental yield over MRT project
KUALA LUMPUR, July 27 — UDA Holdings Bhd may end up with the short end of the stick in its deal with MRT Corporation over Bukit Bintang Plaza (BBP) as it mulls slashing rental for traders affected by the construction of the My Rapid Transit’ s (MRT) largest station just outside the mall.
The Malaysian Insider understands that the UDA management will discuss today offering up to 25 per cent in rental discounts to the building’s 167 majority Bumiputera tenants, most of whom have already been paying a fraction of the rental rates charged to their neighbours in Sungei Wang Plaza.
Sources said “most of the traders” are already behind by one or two months in their payments, while a few of the older tenants have racked up to RM500,000 worth of rental arrears over the years.
UDA earns some RM20 million annually from rental yield by charging BBP traders between RM10 per square feet (psf) to RM20 psf per month in rent. The Malaysian Insider was informed that Sungei Wang Plaza charges up to RM40 psf.
“It’s like UDA is running a charity for them,” a source told The Malaysian Insider..
But despite this, the source said a group of traders is now threatening to stop paying rental altogether if the rates are not discounted, claiming that business has dropped between 50 and 80 per cent since hoardings for the MRT construction were erected earlier this month at the mall’s entrance.
The source said traders have even moved to cite UDA’s management for corruption, apart from holding protests and public briefings, hoping the bad publicity in the media would pressure the Finance Ministry-owned firm to accede to their demand for cheaper rent.
“They have been paying half the market rate for rental for years. How come they did not complain then? Now, since the MRT fiasco, they are refusing to pay the current rental and their outstanding rental.
“They are trying to shake down UDA into not paying rental... by using you (the media) and the MACC (Malaysian Anti-Corruption Commission),” the source said.
“But why should UDA pay them compensation? MRT Corp should. They are the ones tearing down BBP’s frontage.”
The recently-formed BBP Traders’ Association (BBTA) had lodged a report with the MACC last week, alleging criminal breach of trust and power abuse against UDA’s top management.
BBTA representatives would not reveal details of the report at the time but claimed that UDA staff have been playing “favouritism” by offering cheaper rental to those close to the management, citing Metrojaya as an example.
“Well, Metrojaya spent RM12 million to renovate their store, they (the traders) spent nothing,” the source retorted.
“They have been there for years, paying cheap rental. They don’t even bother to follow UDA’s rules on shop renovations and so on. That is why BBP looks so dull.”
When contacted, UDA Holdings general manager Ahmad Abu Bakar confirmed that the UDA management will discuss today how big a discount it can afford to offer the mall’s tenants.
He said UDA had initially wanted to wait at least a month after construction on the MRT station began to ascertain how badly it had affected the businesses of those operating inside the mall.
Ahmad explained that during the July 3 meeting with MRT Corp, BBTA and Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob, it was agreed that MRT Corp would also compensate the traders for loss of business.
“The minister did seek UDA’s consideration to reduce rental... we said we will consider but we also said that we want to see whether business indeed has declined by seeing the traders’ books,” he said.
“But the traders want the rental reduced now... some are even refusing to pay rent. We want to see some verification first because at the end of the day, they will still get compensation from MRT Corp,” he added.
On top of that, he said UDA has also agreed to help the traders work on boosting promotions for their businesses during Ramadan.
He pointed out that all this, coupled with extra compensation from MRT Corp, would result in double benefits for the BBP traders.
“This whole thing has put us in a very tight spot. We agreed to help them with promotions by giving them allocations for decorations and a 50 per cent discount for rental of the booths.
“And now they want rental discounts, when some have arrears. But what can we do?” he said.
Ahmad said at the very minimum, UDA will offer 10 per cent in rental discounts to BBP’s tenants but hope to claim this back from MRT Corp.
“Doubtful it will be successful but we can try,” he said
“In a nutshell, what I saying here is that the traders have already been enjoying lower rent. Yet, we are considering some discounts for rent. And even so, they will be getting compensation from MRT Corp.
“I think UDA has done its best for them,” he added.