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It signs Spore’s second-largest office rental deal for space in Mapletree’s new development 

SINGAPORE’S second-biggest rental deal ever, Merrill Lynch is leasing 200,000 sq ft of space in a new HarbourFront office building.

News of the mega deal was announced by the United States investment bank’s head of global infrastructure solutions, Ms Diane Schueneman, at a ground-breaking ceremony yesterday for the new six-storey building.

Details of the amount of rent to be paid by Merrill were not disclosed.

It is the second-largest office deal here after Deutsche Bank’s tenancy at One Raffles Quay, said Mr Moray Armstrong of CB Richard Ellis, which helped Merrill secure the space.

Deutsche took up about 280,000 sq ft of space at One Raffles Quay, he said. The latest deal comes as rental levels for quality office space are rising amid tightening supply.

The new Mapletree Investments office building in HarbourFront, to be completed around the third quarter of 2008, will house Merrill’s global support centre for its private banking and global markets businesses.

It aims to have 900 staff there by then. In the meantime, it has set up a 55,000 sq ft support centre at HarbourFront Centre next door.

Mapletree said the new building, tentatively called Mapletree Lighthouse, could be injected into a $2.5 billion diversified real estate investment trust (Reit) that it is planning to push out by the end of next year.

The nearby mega VivoCity will be the key asset for the Reit. The other assets will include ‘a few office buildings here and in the Alexandra area’, said Mapletree chief operating officer Tan Boon Leong.

He said Mapletree is expecting office rents to rise by 20 per cent to 30 per cent next year.

To cash in on the improving office market, Mapletree will be developing a second office building in the HarbourFront precinct.

This will be built on the site of the existing SPI Building, which will be torn down as soon as approvals are in. Mapletree had once wanted to convert this waterfront building into a tourist-class hotel, and later an office-cum-residential development.

But the latest plan is to develop it into an office block, which will have a gross floor area of about 350,000 sq ft and a height of four storeys.

Mapletree chief executive officer Hiew Yoon Khong said the new 2.4ha waterfront office building will be partly build on reclaimed land.

The HarbourFront precinct, which includes St James Power Station, will boast 2.35 million sq ft of office space in HarbourFront Tower One, HarbourFront Tower Two, Keppel Bay Tower, HarbourFront Centre and SPI Building.

Mapletree will also have space to build about 300 residential units on a strip of land next to Keppel Bay Tower, which it co-owns with Keppel Land.

Source : Straits Times - 29 Nov 2006

The Urban Redevelopment Authority (URA) has awarded the tender for a hotel site at Mohamed Sultan and Nanson roads to Hong Leong group’s Republic Hotels & Resorts for $45.8 million or $5,578 per square metre.

The tender for the 2,932 sq m leasehold site was launched on Sept 25. The Hong Leong group had put in the highest bid when the tender closed on Nov 21.

Separately, URA also said yesterday that two reserve list hotel sites at Tanjong Pagar are up for application.

Developers can submit a minimum bid and request that these sites be put up for tender.

One is at Tanjong Pagar Road/Gopeng Street and the other at Tanjong Pagar Road/Tras Street. The 99-year leasehold sites are part of the government land sales programme for the second half of 2006.

URA said yesterday that the new projects would help meet demand for hotel rooms, which is expected to increase given the Singapore Tourism Board’s target of 17 million visitors by 2015.

Together with existing hotels in the vicinity, developments at the new sites will help turn the area into a hotel cluster.

The Tanjong Pagar Road/Gopeng Street site is about 0.24 of a hectare and has a gross plot ratio of 8.4, which translates to a maximum permissible gross floor area of 19,933 sq m.

At Tanjong Pagar Road/Tras Street, the land is about 0.29 ha and has a gross plot ratio of 5.6, giving rise to a maximum permissible gross floor area of 16,047 sq m.

Source : Business Times - 29 Nov 2006

Mapletree to include its office buildings in HarbourFront 

The new VivoCity mall has been named as anchor asset for a $2.5 billion mixed real estate investment trust (Reit) which Mapletree Investments says it could launch by the end of next year.

Other properties likely to be included in the Reit could include some of Mapletree’s office buildings in the HarbourFront precinct and its PSA Building at Alexandra Road.

Mapletree CEO Hiew Yoon Khong said yesterday that the final size of the ‘diversified’ Reit will depend largely on the actual launch date of the trust.

He was speaking at the ground-breaking ceremony of Mapletree’s latest office development at the HarbourFront precinct, provisionally named Mapletree Lighthouse. He said that the building, when completed in the last quarter of 2008, would go into the Reit.

He also said that the Reit would initially consist of properties in Singapore but would eventually grow to include overseas property.

The fully-owned unit of Temasek Holdings had earlier planned to float this Reit by the end of 2008 but the strong performance of VivoCity is thought to have accelerated its launch plans, market watchers said.

The mall, with slightly over one million sq ft net lettable area, opened early last month. Mapletree said rentals for retail space there are between $5 and $30 psf and that its committed leases are yielding a net profit income yield of 10 per cent on its total development cost.

Mapletree COO Tan Boon Leong also said that VivoCity is estimated to be valued between $1.7 billion and $2 billion.

Mapletree also owns HarbourFront Centre, formerly known as World Trade Trade Centre, and the nearby entertainment hub, St James Power Station.

Office buildings are, however, likely to make up a significant part of Mapletree’s diversified Reit. In the HarbourFront district, Mapletree owns a 61 per cent stake in HarbourFront Office Park Towers One and Two and a 30 per cent stake in Keppel Bay Tower.

Bullish on the prospect of the market office there, Mr Tan said he expected rents to rise by 20-30 per cent in 2007.

Adding to its growing portfolio, Mr Tan confirmed that Mapletree is planning to build another office building on the site of the current Singapore Port Institute building on the waterfront. ‘We are still working on planning issues but it could kick off in one year’s time,’ he said.

Mapletree’s maiden Reit, Mapletree Logistics Trust, was floated on the Singapore Exchange last year. Earlier this year, BT reported Mapletree also has plans to launch an industrial property Reit by end-2007 and is negotiating to buy more than US$2 billion of industrial property in the region.

Asked about the timimg of the launch of the diversified Reit, in light of comments from market analysts that what was needed was larger Reits and not just more Reits, Mr Hiew said that what was important for a Reit was a ‘growth plan’ and that ‘there is still room to grow in Singapore’.

Source : Business Times - 29 Nov 2006

The CK Tang department store and adjoining Marriott Hotel on the prime Orchard/Scotts Road corner are not for sale.

This is despite interest in buying the properties expressed by a string of suitors, including Real Estate Investment Trusts, according to CK Tang chairman Tang Wee Sung.

There has also been confusion among some of CK Tang’s small shareholders and even analysts who think that the listed retailer owns the entire complex including the hotel, Mr Tang says.

The freehold hotel/retail complex - known as Tang Plaza - is a strata titled property. CK Tang owns its department store space, giving it only about 28 per cent of the total share value in Tang Plaza.

Tang Holdings - a private entity which is majority controlled by Mr Tang’s younger brother Wee Kit - owns the Marriott Hotel, translating to 72 per cent share value in Tang Plaza.

Tang Wee Sung holds a minority interest in Tang Holdings.

A spokesman for Tang Holdings has also confirmed that Tang Plaza is not for sale. ‘We’ll sell our own homes first before we sell this place,’ Mr Tang Wee Sung said in a recent interview with BT.

‘And once and for all, we want to make it clear that CK Tang does not own Marriott Hotel,’ he added.

Mr Tang, however, acknowledges that the site does have redevelopment potential, as widely speculated about - but he adds that redevelopment is currently not an option.

‘It’s not as simple as that. First of all, there’ll be a huge development charge payment involved. And we’ll need to be careful how to do it without jeopardising the business,’ Mr Tang said.

Currently, the Orchard Road department store is the predominant source of income for CK Tang and pulling down the outlet for a redevelopment project will leave a big vacuum in the group’s accounts.

‘There are no plans to redevelop the property right now. It’s a landmark, an icon. I think there are too many glass buildings, personally,’ Mr Tang says.

If, however, in future there is any redevelopment proposal, Tang Holdings will take the lead (as it is Tang Plaza’s majority owner), albeit with CK Tang’s agreement.

‘We’ll not agree to any plans to redevelop that will jeopardise our business,’ Mr Tang said.

In any case, he stressed that CK Tang is a retail, not property, play. So CK Tang will own just the strata retail portion of any possible redevelopment scheme which may come up in the long term, Mr Tang insists. ‘We need the space for the store. We’re becoming quite small compared with the other major players like Takashimaya, Isetan and Robinson.’

Under Master Plan 2003, the freehold site can be redeveloped into a new project with a total maximum gross floor area (GFA) of about 874,000 sq ft, of which at least 60 per cent must be for hotel use and the rest can be for commercial and residential uses, say property consultants. The potential GFA is about 37 per cent more than Tang Plaza’s existing GFA.

Market watchers reckon that based on the site’s redevelopment potential, the total value of the site (inclusive of development charges payable to the state) is easily worth over $1 billion.

Rather than a total redevelopment, which will involve tearing down the existing property and incurring drastic loss of income for CK Tang at least, what’s more likely in the near future is exploring ways to increase the store’s selling area, for instance, by relocating backroom functions.

What could make a redevelopment project more feasible for CK Tang is if it succeeds in expanding its store count significantly to the point where the group’s bottom line could withstand closure of the Orchard Road store for a few years while it is redeveloped.

Source : Business Times - 28 Nov 2006

It hopes to feature 7 flagship luxury stores as retail space is bumped up 

CROWN Hotel At Orchard is to undergo an $80 million revamp that will replace its facade with a modern glass frontage.

It will also feature a gallery of flagship luxury stores in the league of Louis Vuitton, as it more than doubles the amount of retail space on offer at the hotel.

These stores, which span the basement level to the third floor of the property, will have their own individual ground-floor, street-front access.

All 311 hotel rooms, located on levels five to 11, will also undergo an overhaul.

‘We’re going to revamp it into a more trendy and upmarket hotel,’ said Mr Allen Law, director of the hotel’s owner and operator Park Hotel Group.

The revamp will start in January 2009 and is due to be completed in the third quarter of that year.

The timing will roughly coincide with the completion of the Orchard Turn mall and the integrated resort at Marina Bay.

After the revamp, the lobby of the four-star hotel will move from the ground floor to level four of the 11-storey building. And the hotel’s basement two will have 100 carpark lots.

The lettable area at the current retail podium will increase from 4,000 sq m to 9,000 sq m.

The group hopes to attract, at the most, seven luxury fashion brands to set up their flagship property at the revamped arcade.

The brands will each have an entrance that spans a height of two floors and their own internal staircases or lifts, said Mr Law.

‘We’re already in discussions with numerous potential tenants,’ he said.

Feedback is that these retailers have been looking for just such a space in Orchard Road, but so far, no developer has been willing to build such large units, he said.

‘In our case…we want to fully utilise the prominent frontage that our location can offer.’

Mr Law expects the new retail podium to contribute half of Crown Hotel’s earnings, up from the 35 per cent to 40 per cent that is contributed by the existing retail space.

Source : Straits Times - 27 Nov 2006