Source : The Business Times, July 15, 2009
Tenants pay for space in its malls with preference shares, not rent
FAR East Organization has launched a scheme that allows budding entrepreneurs to pay for space in its malls with preference shares instead of regular rents.
A first for Singapore retail market: Far East Organization will allocate up to 5 per cent of rental space at six of its malls for the Rental Space for Equity Programme including Orchard Central (left)
Under the Rental Space for Equity Programme - a first for Singapore retail market - selected tenants will sign a two or three-year lease with Far East. To pay for space, the tenants will issue redeemable, convertible, cumulative, preference shares (RCCPS) to the company in lieu of monthly base rent. The shares come with a cumulative dividend of 4 per cent per year.
Tenants can choose to redeem the RCCPS after one or two years or at the end of the lease period. When redeeming the shares, they will pay all the rent they owe, as well as the 4 per cent a year interest they accumulated.
Alternatively, the RCCPS may be converted to ordinary shares, which means Far East will own a stake in the retail business. The choice will be left to tenants.
Far East will allocate up to 5 per cent of rental space at six of its malls for the scheme - Central, Far East Square, Orchard Central, Pacific Plaza, Square 2 and West Coast Plaza.
The programme aims to encourage the entry of new brands and retailers into the retail scene here.
Far East Organization's executive director of investment properties Eddie Yong said the group has always supported businesses in its own way.
'We always want the best for our tenants and to see them grow,' he said. 'That is why we are responding to the needs of the market with the Rental Space for Equity Programme. We see it as a pro-active partnership by lowering the entry barrier for prospective tenants who have exciting brands or concepts.'
Target participants include vendors with new brands, existing retailers who want to expand and budding entrepreneurs who want to get a headstart.
For first-time entrepreneurs, Far East has identified an audit firm to help them form their new company and will help defray these administrative expenses.
No comments:
Post a Comment