THE Employees Provident Fund (EPF) is in the process of getting the green light from City Hall to convert its long-vacant office building in Kuala Lumpur’s Golden Triangle — Wisma KFC — into a 430-room luxury-class hotel. It is learnt that the provident fund is securing the relevant approvals for the building in Jalan Sultan Ismail on behalf of the new owners.

Built in the 1990s, the 22-storey building has four basement floors and 268 parking bays, a gross floor area of 342,145 sq ft and a net floor area of 175,292 sq ft. The building sits on a 0.5 acre freehold plot. In February, The Edge reported that Wisma KFC had been sold to Singapore’s Royal Group for RM130 million. The parties in the deal did not confirm or deny the article.

A document sighted by The Edge shows that EPF submitted plans to Dewan Bandaraya Kuala Lumpur on Nov 1 seeking planning permission. The document also indicates that approvals are being sought by the EPF’s Private Markets Department on behalf of a company called Expert Rewards Sdn Bhd.

A search on the Companies Commission of Malaysia (SSM) website reveals that the shareholders of Expert Rewards are Royal Group Capital Pte Ltd (50%), Wasimah Bashir Ahmed Osmanbhoy (30%) and NMM Pte Ltd (20%). It is understood that Wasimah is possibly the company’s 30% bumiputera shareholder.

The directors of the company are listed as Naraindas Gangaram and Asok Kumar Naraindas, who are both from Singapore. Forbes lists the latter as Singapore’s 17th richest individual with a net worth of US$1.9 billion. There is one other director, Phang Lee Kah.

It is not clear why the EPF, instead of Expert Rewards, is applying to convert the office building into a hotel. One possibility is that the purchaser may have set a condition precedent that EPF has to obtain all the necessary building approvals.

EPF did not respond to questions sent by The Edge. Royal Group co-chairman Bobby Hiranandani also did not respond to a WhatsApp message sent to him.

“This sale is not reflected in National Information Property Centre sales data. Hence, it appears that the sale reported [in an article] in early 2019 is a conditional sale subject to an approval to change the building status from office to a luxurious 430-room hotel…. The intention of the Royal Group is to retrofit the building into a luxurious 430-room hotel,” VPC Alliance Sdn Bhd managing director James Wong tells The Edge.

The property valuer and real estate agent adds, “In our opinion, the reported sale of the ex-Wisma KFC at RM130 million to the Royal Group, reflecting RM750 psf based on its gross floor area of 342,145 sq ft, is fair market value, comparing this property with Menara Prudential, with a 78% occupancy rate and sold in 2016 for RM125 million. On the other hand, Wisma KFC had been vacant and unoccupied for many years. However, the site of the ex-Wisma KFC is in a very prime location, close to the busy intersection of Jalan Sultan Ismail and Jalan P Ramlee.”

Industry observers say it could be easier for a government-liked investment company like EPF to obtain the development order.

Wisma KFC was once known as Wisma Idris and was the former headquarters of Kentucky Fried Chicken Holdings (M) Bhd (KFCH). The EPF bought the building from KFCH for RM90 million in 2004.

In view of the oversupply of office space in Kuala Lumpur, repurposing the asset may prove to be a good move.

It is not the first time an office building has been converted into a hotel. In 2015, Menara ING in Jalan Raja Chulan was repositioned as The Holiday Inn Express Kuala Lumpur.

In October, a company called Oriental Place Sdn Bhd submitted an application to convert a 20-storey building with podium levels and two basement floors into a 22-storey hotel with 368 rooms as well as a swimming pool.

A search on the SSM website shows that Oriental Place is owned by Yeoh Tiong Lay & Sons Holdings Sdn Bhd, a company linked to the family behind YTL Group.  The business address is listed as 1, Jalan Hang Lekiu, Kuala Lumpur, which is the former Bangunan Oriental Bank.

Incidentally, YTL Hospitality REIT owns and manages several luxury-class hotels in Malaysia including the JW Marriott, The Ritz Carlton and The Majestic Hotel in Kuala Lumpur as well Pangkor Laut Resort in Perak and Tanjung Jara Resort in Terengganu.

YTL Hospitality REIT is expanding the JW Marriott by converting the top three floors of retail space in Starhill Gallery into 160 hotel rooms. The latter is owned by Singapore-listed Starhill Global REIT, which is managed by YTL Starhill Global REIT Management Ltd.

The manager is a wholly-owned subsidiary of YTL Starhill Global REIT Management Holdings Pte Ltd, which is an indirect subsidiary of YTL Corp Bhd.

YTL Hospitality REIT’s manager is Pintas Projek Sdn Bhd, a 70%-owned subsidiary of YTL Land Sdn Bhd, a wholly-owned subsidiary of YTL Corp.

It will be interesting to see what Royal Group does with Wisma KFC and which hotel brand will be the operator. Royal Group could end up holding on to the hotel asset as in the case of DoubleTree by Hilton, or it may want to flip the asset as it tried to with Hilton Garden Inn North and South in Kuala Lumpur.