Suntec – BT

Suntec City to get $410m makeover

Project set to boost retail space, spruce up exhibition venues

Suntec City is set to undergo a $410 million asset enhancement initiative (AEI) that is set to boost its retail space and spruce up its exhibition venues .

To be completed over four phases, the refurbishment project will comprise $230 million on Suntec City Mall, and $180 million on Suntec Singapore International Convention and Exhibition Centre (Suntec Singapore).

Scheduled to take place between mid-2012 and 2015, retail net lettable area (NLA) is expected to increase by 14.6 per cent, from its current 855,000 sf to 980,000 sf, following the conversion of the first and second floors of the convention centre into retail use.

Post-AEI, Suntec City Mall’s net property income is expected to increase by 33 per cent, or $23 million, representing a 10.1 per cent return on investment for unitholders and an 84 per cent increase in capital value over capital expenditure, based on the current capitalisation rate of 5.5 per cent, said Suntec reit.

Overall, stabilised rents are projected to increase by 25 per cent, the company said.

Yeo See Kiat, chief executive of ARA Trust Management (Suntec) Limited, which manages Suntec Reit, said: ‘We have carefully planned the implementation phases to minimise disruptions to both tenants and visitors. The AEI, when completed, would significantly enhance value to all our stakeholders.’

According to Suntec Reit, phases one and two of the AEI will cost approximately $55 million and $75 million respectively, whereas phase three and four will cost approximately $50 million respectively.

The $230 million capital expenditure will be funded by sale proceeds from the divestment of Chijmes and bank borrowings.

Suntec Reit had announced last month that it was selling Chijmes for $177 million to an entity whose shareholders include Pua Seck Guan’s Perennial Real Estate group and OSIM boss Ron Sim.

‘During the execution of the AEI works, we would use part of the sale proceeds from Chijmes to mitigate the temporary dip in DPU (distribution per unit),’ said Mr Yeo.

Suntec Singapore, of which Suntec Reit holds an effective interest of 60.8 per cent, will fund its capital expenditure of $180 million by its own bank borrowings.

The enhancement exercise is scheduled to start mid-2012 through to 2015, and will feature a diverse and wide range of food and beverage choices, new restaurant concepts, stylish cafes, and new food courts.

Part of the Suntec City Mall rebranding exercise will include bringing in more F&B options, said the company – the new tenant mix will feature 35 per cent F&B outlets; 35 per cent anchor/mini anchor (anchor stores, hyper market, 15-screen cineplex, fitness centre); and 30 per cent specialty retail space (specialty boutiques, fast fashion and accessories, new-to-market concept stores).

Other proposed enhancements include new retail entrances, duplex and anchor stores, a new sky garden featuring alfresco restaurants and watering holes, direct connectivity from the convention centre into the mall, and a dedicated MICE (meetings, incentives, conferences, and exhibitions) entrance with express escalators.

The redesign of Suntec Singapore will also pay particular attention to flexibility, functionality, and convertibility, while integrating a high degree of advanced technology, which includes a two-storey interactive digital wall and a modernised facade.

The convention centre will operate from levels two to seven, with a grand entrance on level three, served by express escalators from the ground level.