SINGAPORE'S oldest multi-storey carpark, on Market Street, will be redeveloped into a $1.4 billion Grade A office tower, CapitaCommercial Trust (CCT) confirmed yesterday.
The project is set to be completed by 2014, in a significant alteration to the central business district skyline.
CapitaCommercial Trust Management - CCT's manager - said that it intends to partner CapitaLand in the project, which is expected to have a development cost of $1,900 per sq ft of net lettable area.
The project is estimated to provide a gross floor area of 887,000 sq ft with floor plates of up to 25,000 sq ft.
The carpark was built in 1964. Redevelopment plans have been on the drawing board for more than 15 years but it was only in 2008 that the authorities granted permission, the manager said. The redevelopment was, however, deferred in 2009 owing to the financial crisis.
'Having considered the unexpired land lease, estimated project cost, potential office market rent and there being no other new Grade A office building completing in 2014 in the core CBD area, we believe that a Grade A office tower is the best use for the site,' Ms Lynette Leong, chief executive of the manager said.
CCT said the stabilised yield for the completed project is expected to exceed 6 per cent a year. It will be funded through the trust's internal cash resources and debt.
A special purpose vehicle will be set up with CCT owning 40 per cent and CapitaLand, the balance.
Property fund guidelines for Singapore real estate investment trusts mandate that they may only develop projects the total cost of which must not exceed 10 per cent of its total asset size. This development limit is $601 million for CCT.
CCT also announced yesterday that its first quarter distributable income dipped 4.1 per cent to $52.1 million from $54.3 million in the same period last year. Distribution per unit fell by 4.7 per cent to 1.84 cents.
This decline was mainly due to the reduction in rental income after the sale of StarHub Centre and Robinson Point and from a lower revenue contribution from Six Battery Road due to asset enhancement works. Net property income fell 10 per cent to $70 million while gross revenue slid 11 per cent to $91 million. CCT units fell one cent to $1.41 yesterday.