FCOT still in talks with Hewlett Packard Singapore on Alexandra Technopark leases, to revamp China Square Central retail podium

A view of the HP facility in Alexandra Technopark in 2014.
A view of the HP facility in Alexandra Technopark in 2014.FILE PHOTO: ST

SINGAPORE - Frasers Commercial Trust (FCOT) in its pre-market earnings statement on Friday (Oct 20) disclosed that it is still in discussion with tenant, Hewlett-Packard Singapore (HPS) on the latter's plans for its leases at Alexandra Technopark.

HPS currently occupies about 304,920 square feet of space at the technopark under leases expiring on Nov 30, 2017, and which constitute approximately 11.1 per cent of FCOT's total gross rental income for the month ended Sept 30, 2017.

FCOT said its manager will announce material developments with regard to the HPS leases at the appropriate time.

Last month, FCOT's manager announced that Hewlett-Packard Enterprise Singapore (HPE) intended to vacate an aggregate of 178,843 sf of space at the technopark when the relevant leases expired on Sept 30 and Nov 30 this year. The space vacated or to be vacated by HPE accounts for around 17.1 per cent of the total net lettable area of the property and 6.6 per cent of FCT's portfolio gross rental income as at Sept 30, 2017.

To date, about 61,000 sq ft of the space vacated by HPE has been committed to other tenants, FCOT said on Friday.

It added that its manager will continue to carry out proactive leasing and asset management strategies to normalize occupancy at the technopark as soon as possible. The property is undergoing a previously-announced S$45 million revamp, to be completed by around mid-2018, which FCOT said will transform it into a "vibrant, engaging and stimulating business campus that will enhance its long-term market position and competitiveness".

FCOT also disclosed that it has obtained provisional permission from the Urban Redevelopment Authority to revamp the retail podium of China Square Central at Cross Street.

To cost approximately S$38 million, the project aims to "rejuvenate and reposition the retail podium to create an exciting destination focusing on food and beverage, wellness and services", said FCOT.

The move will increase the net lettable area of the retail podium from the current 64,000 sq ft to around 75,000 sq ft so as to boost its income-generating potential. The revamp is expected to begin in the first quarter of next year and be completed around mid-2019.

The upgrading, together with the introduction of a new Capri by Fraser hotel in the development in 2019, will complete the overall revamp of China Square Central, said FCOT.

The trust saw a 1.6 per cent dip in distribution per unit (DPU) for the fourth quarter ended Aug 30, 2017, to 2.41 Singapore cents from the year-ago period on a bigger unit base, higher repair rates and lower occupancy rates.

Full-year DPU was steady at 9.82 cents from a year ago.

Full-year net property income (NPI) for the overall portfolio declined 1.5 per cent year-on-year to S$113.8 million, mainly due to the higher repair and maintenance expenses for Caroline Chisholm Centre and lower occupancy rates at Alexandra Technopark, China Square Central and Central Park.

However, NPI for the Australian properties increased 2.5 per cent year-on-year mainly due to better performance from 357 Collins Street on the back of higher average occupancy and rental rates achieved, coupled with the stronger Australian dollar.