Mapletree Industrial Trust said on Friday it has agreed to develop for Hewlett-Packard Singapore a new build-to-suit facility at its existing Telok Blangah Cluster.

It will then lease the facility to Hewlett-Packard Singapore for an initial period of 10 and a half years, including a rent-free period of six months, the trust said.

Hewlett-Packard Singapore has also agreed to annual rental escalations and an option to renew the lease for two additional five-year terms.

The property has a land lease tenure of 60 years starting from July 2008.

Redeveloping the property as a high-tech industrial cluster is estimated to cost $250 million and be completed in the first half of 2017.

The property currently comprises two seven-storey flatted factories and a canteen, with a land area of about 329,800 sq ft and gross floor area of about 437,300 sq ft.

After the redevelopment, it will comprise facilities for manufacturing, product and software development as well as an office, and span a gross floor area of about 824,500 sq ft.

The build-to-suit development will be Mapletree Industrial Trust's largest to date and is expected to add to the trust's distribution per unit upon its completion.

The trust said it has enough financial capacity to fund the redevelopment. Assuming it is fully funded by debt, the trust's aggregate leverage ratio is expected to increase progressively from 36.3 per cent as at Dec 31 last year to 41 per cent upon completion of the facility.