Its 'advanced talks' with OCBC may see new complex taking shape come year-end
THERE seems to be some progress at last in the much-anticipated redevelopment of the Specialists' Shopping Centre and Hotel Phoenix complex in Orchard Road.
The Straits Trading Company - which is the object of a buyout offer - announced yesterday that it is in 'advanced negotiations' with site owner OCBC Bank regarding redevelopment and management plans. Construction of a 21-storey complex with shops and a 580-room hotel will begin in the second half of this year, according to OCBC.
The complex will be linked to Far East Organization's upcoming Orchard Central mall and Lend Lease's upcoming Somerset Central mall, both nearby.
The announcement yesterday was as much about the complex ownership and development structure put in place in response to amended restrictions that prevent banks from getting involved in property development.
Straits Trading is a holding company with businesses that range from smelting and mining to hotel investment and property development.
As it is the subject of a buyout offer by The Cairns, a privately held investment firm that is part of the Tecity group, it had to inform shareholders of its advanced talks with OCBC.
Tecity is controlled by the family of the late Dr Tan Chin Tuan, a past chairman of OCBC. Dr Tan set up Tecity, which has held a stake in Straits Trading since the 1950s.
The OCBC group also holds a stake, directly and indirectly, amounting to 26.1 per cent.
Dr Tan also started the old 392-room Hotel Phoenix, which closed in August after 35 years.
In yesterday's statement, Straits Trading said OCBC will appoint a Straits Trading special-purpose vehicle to undertake the construction of the complex.
The proposed arrangements include funding for the vehicle and the construction based on a maximum development cost to be agreed on between Straits Trading and OCBC.
Once the complex has been completed, Straits Trading will sell it to OCBC and then lease it back for three years, with an option to renew the lease for a further three years.
OCBC said it had opted for a sale and leaseback plan because it sees the property investment as one that will bring 'long-term financial returns'.
Design details for the new complex, which will have a total gross floor area of 50,079.07 sq m and a net retail lettable area of 14,014 sq m, are still being finalised.
Sixty per cent of the gross floor area will be taken up by the hotel, and the remainder by retail shops and a carpark that will accommodate 262 vehicles.
Tange Associates is the architect for the project.
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