SINGAPORE - 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, the manager of the mainboard-listed real estate industrial trust (Reit) said.
This will be MIT's largest redevelopment project to date, and is another strategic step in growing its high-tech buildings segment, the manager announced in a filing on Wednesday morning (July 10).
The proposed redevelopment of the Kolam Ayer 2 Cluster includes a build-to-suit facility for a global medical device company headquartered in Germany. The facility will be customised to the German firm's specifications and needs.
The medical device company will be the anchor tenant, and has committed to lease the build-to-suit facility for an initial lease term of 15 years.
The facility will account for about 24.4 per cent of the enlarged gross floor area (GFA) after the redevelopment.
Subject to approvals from the relevant authorities, the proposed redevelopment is expected to start construction in the second half of 2020 and complete in the second half of 2022.
For existing tenants at the cluster, the Reit manager will provide a tenant assistance package.
Under this package, tenants will receive an extended notice period of 12 months at preferential gross rental rates for their remaining leases at the cluster.
They will not be required to reinstate their premises and will not need to compensate for early termination if they choose to move out before their leases expire.
All existing tenants will be informed of the proposed redevelopment and the Reit manager will "actively" help them relocate to alternative clusters within MIT's portfolio, the manager said.
The $263 million total project cost includes the development cost of the build-to-suit facility and the $70.2 million book value of the cluster as at March 31 before the commencement of the proposed redevelopment.
The Kolam Ayer 2 cluster at 155, 155A and 161 Kallang Way sits on a land of about 346,270 sq ft located near the MacPherson neighbourhood and a short drive to the central business district.
It comprises two seven-storey flatted factories and an amenity centre. Flatted factories are multi-storey industrial buildings with multiple tenants and common facilities such as goods lifts.
With a GFA of 506,720 sq ft, the cluster is zoned for Business 2 use with its land lease tenure of 43 years starting from July 1, 2008.
The redevelopment will increase the utilised plot ratio from 1.5 to 2.5, and increase the total GFA to about 865,600 sq ft.
The project will reposition the flatted-factory cluster as a high-tech industrial precinct and use untapped plot ratio, said Tham Kuo Wei, chief executive of the Reit manager.
The anchor tenant's long-term lease commitment will also provide stable income and increase MIT's portfolio's weighted average lease to expiry, he noted.
Units of Mapletree Industrial Trust closed at $2.26 on Tuesday, down four cents or 1.739 per cent.
