SINGAPORE - ESR-Reit has secured a new lease for about 168,846 square feet (sq ft) at its 8 Tuas South Lane property to Singapore railway firm P-Way Construction and Engineering, the industrial Reit's (real estate investment trust) manager said on Thursday morning (Sept 5).
P-Way will use the space to supply steel fabrication works, store railway equipment and parts, and provide dormitory services for its employees.
The company specialises in railway construction, installation and maintenance, and is contracted by the Singapore Land Transport Authority to provide track work services.
P-Way will house its operations related to the upcoming Jurong Region MRT Line and the extension of Changi Airport Terminal to the train depot at the Tuas property. The company is expected to start these operations from Oct 1 this year.
8 Tuas South Lane is a multi-tenanted general industrial property in the west of Singapore, positioned in the heart of the city-state's largest manufacturing hub and at the gateway to the upcoming container terminal Tuas Megaport. The first phase of the port is scheduled to complete in 2021.
Hyflux Membrane Manufacturing (S), a subsidiary of beleaguered water treatment firm Hyflux, is one of the tenants at the property.
In March, ESR-Reit filed proofs of claim against Hyflux and the subsidiary. But ESR-Reit noted that Hyflux Membrane had not defaulted on its rental payment, and that the landlord in March held security deposits equivalent to three months of rental in the form of bank guarantees amounting to about S$2.1 million, which have not been drawn down.
Hyflux Membrane now accounts for 3.1 per cent of ESR-Reit's total rental income, down from 3.6 per cent as at June 30.
"This is part of the manager's proactive asset management to diversify the tenant concentration risks and improve tenant mix and quality," the Reit manager said on Thursday.
The manager added that the Tuas property continues to receive "strong leasing interest" and enquiries due to its proximity to the future Tuas Megaport.
Units of ESR-Reit closed at $0.51 on Wednesday, down 0.5 cent or 0.97 per cent.