Mapletree Industrial Trust (MIT) plans to redevelop a flatted factory cluster in Kallang Way into a high-tech industrial precinct at a total project cost of about $263 million.

This will be MIT's largest redevelopment project and another step in expanding its high-tech building segment, the trust manager said in a Singapore Exchange filing yesterday.

The proposed redevelopment of the Kolam Ayer 2 cluster includes a build-to-suit facility for a global medical device company based in Germany.

This firm will be the anchor tenant and has committed to lease the facility, which will account for 24.4 per cent of the enlarged gross floor area (GFA) after the redevelopment, for an initial term of 15 years.

The manager said this lease will provide a source of stable income at the new development.

The redevelopment work is expected to start in the second half of next year and will take about two years.

The Reit manager will provide an assistance package for existing tenants at the cluster.

They will get an extended notice period of 12 months at preferential rates for their remaining leases.

They will not be required to reinstate their premises and will not have to compensate for early termination if they leave before their leases expire.

The manager will also "actively" help tenants relocate to alternative sites within MIT's portfolio.

The Kolam Ayer 2 cluster in Kallang Way sits on a site of about 346,270 sq ft near the MacPherson area and is a short drive to the central business district.

It comprises two seven-storey flatted factories and an amenity centre. Flatted factories are multi-storey buildings with multiple tenants and common facilities such as lifts for goods.

The redevelopment will raise the utilised plot ratio from 1.5 to 2.5 and increase the total GFA to about 865,600 sq ft.

MIT units closed up 1.3 per cent at $2.29 yesterday.