CCT – UOBKH

Plans to redevelop Market Street Car Park postponed

CCT has decided not to submit design plans for the redevelopment of Market Street Car Park before mid-2009 after considering the significant size of the project, rising construction costs and volatility in the financial markets. The design plans for the iconic Grade A office building was required to obtain Provisional Permission (PP) from the Urban Redevelopment Authority (URA). The Chief Valuer will then conduct assessment of the enhancement in land value based on the design plans and determine the amount of development premium payable. CCT will evaluate financial viability and funding structure for the redevelopment project after the amount of development premium is determined.

CCT has previously estimated the cost to redevelop the site into a Grade A office tower with estimated gross floor area of 850,000sf at between S$1b to S$1.5b. The building was originally expected to be ready by 1H2012. We did not view the development negatively due to:

• We did not factor in any contribution from the redevelopment of Market Street Car Park in our earnings forecast.

• CCT will focus on digesting the acquisition of One George Street. CCT’s asset size would increase to S$6.5m after the acquisition of One George Street is completed. This allows CCT to undertake development projects of up to S$1.4b in size on a 50:50 JV basis. Pursuing the redevelopment of Market Street Car Park at a later stage allows CCT to secure a larger slice of returns from redeveloping the site.

• The project is postponed but not cancelled. The redevelopment potential of Market Street Car Park remains to be exploited.