The Manager of AIMS AMP Capital Industrial REIT (AA REIT) today announced plans to redevelop 8 & 10 Tuas Avenue 20 under its ongoing asset enhancement strategy. The redevelopment will transform two adjoining two-storey detached industrial spaces into a versatile industrial facility with ramp and cargo lift access, making it suitable for production and warehouse usage.
Due for completion in 2H of 2017, the property’s value upon completion is estimated at S$32 million**. Gross floor area will increase by around 41,614 square feet or 35 per cent, improving the plot ratio from 1.03 to the maximum of 1.4. The Manager’s Chief Executive Officer Mr Koh Wee Lih said, “We’re excited to announce this project as we focus on unlocking more organic growth from our portfolio through asset enhancements, to deliver long-term value for Unitholders.”
8 & 10 Tuas Avenue 20 represents AA REIT’s fourth development, adding to the Manager’s successful track record. Plans to redevelop this property were accelerated following a fire incident at the property, which resulted in partial damage. AA REIT’s insurance fully covered the loss of income caused by the incident, and the reinstatement of the asset.
Mr Koh said, “Rather than reinstate the buildings to their original condition where the specifications are customised, we will capitalise on its downtime, and the insurance compensation, to improve the property’s specifications for the current market. This is also timely as the master tenancy expires in mid-2016.”
The property contributed around one percent to AA REIT’s net rental revenue in FY2015. Mr Koh said, “With improving infrastructure and connectivity in Tuas, and supply of industrial spaces forecast to fall beyond 2017, the development’s completion will be well-timed for the market. The property’s value and desirability will also further increase when Singapore’s port facilities shift to Tuas, stimulating demand for production and warehouse facilities.”
The initiative also coincides with the opening of new highways, and the Tuas West MRT Station, which is conveniently located a short distance away. The redevelopment will cost approximately S$27 million (including land cost), and AA REIT has sufficient funding capacity for this project. The Trust’s pro-forma leverage will remain healthy at 33.7 per cent based on its position at 31 December 2015, and taking into account the completion of the 30 & 32 Tuas West Road and 8 & 10 Tuas Avenue 20 redevelopments.
Following a tender process, Boustead Projects Pte Ltd has been appointed as the redevelopment design-and-build partner. The redevelopment has obtained JTC’s in-principle approval but is still subjected to other relevant authorities’ approval.
** Based on Savills Valuation and Professional Services (S) Pte Ltd’s valuation dated 31 March 2016.