Hewlett Packard to vacate FCT's Alexandra Technopark

HPE contributes to 6.6% of FCT's total gross rental income.

Hewlett Packard Enterprise (HPE) would be vacating over 178,843 sqft. of space as its tenancy in Frasers Commercial Trust (FCT) nears expiration in September to November 2017.

According to RHV, HPE currently occupies a total of 191,846 sq ft in Alexandra Technopark (ATP).

The space to be vacated comprises around 17.1% of the total net leasable area (NLA) of ATP and 6.6% of FCT's total gross rental income for the month.

RHB said FCT's distribution per unit (DPU) is likely to drop by 4-6%.

HPE's average rent of $4 psf is currently similar to the market rate.

FCT, however, should be able to fill the empty space in a few months due to bottoming of office supply and pick-up of demand.

Here's more from RHB:

FCOT is still in discussion with another tenant, Hewlett-Packard Singapore Pte Ltd (HPS), which currently occupies a bigger 304,920 sq ft of space at ATP.

The lease is expiring in Nov 2017 and constitutes approximately 11.1% of FCOT’s total gross rental income for the month ended June 2017.

We believe there is a good possibility that the bulk of the leases would unlikely be renewed with HPS moving a majority of its operations to its purpose-built facility at 1A Depot Close.

The asset enhancement initiative (AEI) includes a new entrance gateway, revamping the facades, upgrading of the common-space and additional covered walkways.

The revamped property would also have better amenities such as a new food court, food and beverage outlets, clinic, landscaped roof garden and other facilities to be located at the Central Plaza.

The AEI, which commenced in mid-2017, is expected to be completed by mid-2018. We view the AEI as a step in the right direction and would help enhance the yields of the property, which is currently in a competitive environment.