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Sun Plaza goes on the market for over $300m

Posted on 11 Mar 2010 | Comments Off

Investment buzz in shopping centre scene; Alpha takes stake in Katong Mall

THE shopping centre investment scene seems to be abuzz. At least one property is being put on the market officially.

Sun Plaza, located between Sembawang MRT station and bus interchange, will be marketed through an expression of interest exercise.

The asking price for the 11-year-old mall, owned by Heeton Holdings and Koh Brothers, is understood to be in excess of $300 million or $2,000 per square foot (psf) of net lettable area.

The mall has seven levels, two of which are basement floors, and offers scope for asset enhancement work and repositioning to boost yields.

Meanwhile, over in the Katong area, a fund managed by Alpha Investment Partners is said to have taken a majority stake, believed to be around 70 per cent, in the consortium that bought Katong Mall late last year for $247.6 million.

The consortium, originated by former CapitaMalls Trust chief executive Pua Seck Guan, also includes China-based retailer Beijing Hualian Group and BreadTalk Group.

Katong Mall, located at the corner of East Coast and Joo Chiat roads, will be revamped and its net lettable area boosted by about 20 per cent.

Alpha, Keppel Land’s fund management unit, has also been active in other segments of the property market. Another of its funds controls 90 per cent of a company that owns the newly spruced-up office block at Cecil Street known as The Spazio (formerly Dapenso Building).

In Shanghai, Alpha is expected to bag an upscale service apartment block from Morgan Stanley Real Estate in a transaction estimated at about 900 million yuan (S$184 million).

Over in Singapore’s Sembawang area, CB Richard Ellis is handling the expression of interest exercise for Sun Plaza.

The property has been built to its maximum plot ratio; hence, it is being pitched for its asset enhancement potential.

For instance, a community library on the third level could be moved to a higher level with the library space decanted to create higher-value retail / restaurant space, for example, in basement 1.

As well, a cineplex on the fourth and fifth levels that was formerly operated by Eng Wah has been left vacant, presenting an opportunity for a new investor to reconfigure the space into smaller lots for lease to higher-paying tenants.

Sun Plaza’s retail area is spread across six levels, including basement 1. Basement 2 is occupied by 260 carpark lots.

Currently, the average gross monthly rental for the mall is said to be about $8 per square foot but market watchers reckon that through asset enhancement works and improving tenant mix, it might be possible to raise this figure to $12-14 psf.

Sun Plaza is on a site with a remaining lease term of about 85 years. Tenants include NTUC FairPrice, Yamaha Music School, Taka Jewellery and Kopitiam.

Above Sun Plaza are 76 apartments which were sold by the developers years ago.

Source : Business Times – 11 Mar 2010

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Posted in Office / Retail / Industrial

Tagged Katong Mall, Retail Space, Singapore Retail, Sun Plaza

Orchard Central tenants come up empty

Posted on 4 Mar 2010 | Comments Off

Observers cite lack of anchor tenant and complicated layout as reasons for poor business

The empty corridors at Orchard Central make for a woeful sight. One shop has already closed, and tenants have asked landlord Far East Organization for rental rebates. — ST PHOTO: RAJ NADARAJAN

THE tenants at Orchard Central mall, which is barely a year old, say they are struggling to keep their businesses afloat.

The corridors outside the shops are quiet, and walk-in customers are a rare breed – a stark contrast to the buzz at 313@Somerset and Ion Orchard, two malls which also opened last year.

At least one shop at Orchard Central, Fox Salon, has already closed, and tenants say about 70 of them have gone to landlord Far East Organization (FEO) to plead for rental rebates.

Other shops in Orchard Central seem headed the same way as Fox Salon, but some tenants are holding on, for fear of incurring the penalty for breaking their leases.

A beauty parlour owner, who gave her name as Ms Ng, said: ‘We really want to leave this place. How are we to survive here for three more years?’

Each day she stays, she loses about $500, she said.

Her fourth-floor neighbour, Optical 88, is seeing an average of just four customers a day, fewer than at its other outlets in the heartlands.

Only a few shops seem to be keeping their heads above water. One is hair salon La Coco, which markets itself to Korean expatriates. It said it gets about 40 customers a day.

A spokesman for the salon said its Korean stylists keep the regulars returning, but if it had to rely on walk-ins, it too would go under.

Many other tenants declined to comment, saying their landlord had warned them against talking to reporters. This was denied by FEO, which said it was ‘reviewing the performance of the outlets on a month-to-month basis’ and ‘granting rental assistance when appropriate’.

The mall, together with 313@Somerset and Ion Orchard, opened to great fanfare last year, hoping to benefit from a shopping frenzy as the economy emerged from a slump. It pulled in a million shoppers last December.

That was its peak number, said FEO, but it was also the traditional Christmas shopping period. In addition, FEO had pumped $5 million into advertising and promotions to get it off to a good start.

Orchard Central welcomed its first shoppers last May, departing from standard mall conventions in two ways: One was that it was a ‘vertical mall’, with 11 storeys of shops above ground. The other was its absence of anchor tenants.

Mall watchers say these factors may be why it is doing badly. Mr Colin Tan, director of property consultancy Chesterton International, said a mall needs a crowd puller like a cinema or a big department store. He also said that Orchard Central’s labyrinthian layout does it no favours.

Auditor Teng Oon Tang, 24, who said she is unlikely to go back, said: ‘Whenever I go there, I get lost or end up in a dead end. The only good thing it has are the comfortable sofas.’

Mr Ooi Eng Peng, chief executive of Lend Lease, which designed the neighbouring 313@Somerset, said his mall was built for easy navigation and to show off the shops. ‘We’re really happy with the mall. It has caught on as Singaporeans’ favourite.’

Business is booming there, and at Ion Orchard. Nine million shoppers have visited 313@Somerset in three months, and Ion Orchard has been packing in 4.5 million visitors a month.

A check with their tenants confirmed this.

Marche at 313@Somerset says it serves more than 1,500 diners a day. Very Wooonderland, a clothing store in Ion Orchard, averages 100 customers daily and makes about $30,000 a month.

Source : Straits Times – 4 Mar 2010