Business Times - 05 May 2009
A-Reit to develop building for lease to SingTel
TOP for the $175m project is expected in the first quarter of 2010
By AMIT ROY CHOUDHURY
ASCENDAS Real Estate Investment Trust (A-Reit) has signed a deal with Singapore Telecommunications (SingTel) to develop a high- tech industrial building at Kim Chuan Road for a total cost of around $175.4 million.
The proposed development is a built-to-suit project for lease to SingTel. SingTel will lease the entire building for an initial tenure of 20 years with annual rental escalation with an option to renew for a further 10 years on expiry.
The land, measuring around 13,879 square metres, will be used by A-Reit to build a nine storey high-tech building with the total investment for the base building and land set at around $99.6 million.
A further investment of up to $75.8 million would be made in the installation of additional mechanical and electrical equipment to enhance the building specifications to the requirements of SingTel.
The development is within walking distance to the future Tai Seng MRT station and is next to the Kim Chuan Telecommunications Complex, an existing building owned by A-Reit which is currently also leased to SingTel.
The building is expected to have a gross floor area of approximately 32,862 square metres on completion.
The tenure of the land comprises the unexpired portion of a leasehold term of 99 years commencing from March 31, 1992. The Temporary Occupation Permit (TOP) for the development is expected in the first quarter of 2010.
Upon the execution of the sale and purchase (S&P) agreement, A-Reit will hand over to SingTel an on-demand banker's guarantee for the deposit amount of $1.6 million representing 10 per cent of the purchase price of $16 million for the piece of land.
The land valuation was done by DTZ Debenham Tie Leung on April 1 this year.
Also on completion of the S&P agreement, the two parties will enter into the agreement for lease.
A-Reit will fund the development by debt and/or equity.
The project is expected to increase A-Reit's net profit for fiscal 2008-09 by about 2 per cent, assuming that the project was completed at the beginning of that financial year and was funded using 100 per cent debt funding.