Sheng Siong Enters Agreement Jtc Lease Sungei Kadut Property Bigger Warehouse And Distribution

A lease agreement has been entered into between Sheng Siong Group’s subsidiary, CMM Marketing Management, and JTC Corporation to establish a new warehouse, distribution centre and headquarters at Sungei Kadut.

The agreement, which was received by CMM in August, is for a 33-year lease of land at Sungei Kadut Street 1 with a land area of 61,297 square metres and a maximum gross plot ratio of 2.50.

Currently, CMM resides at Mandai Link with a land area of 25,005 square metres and a maximum gross plot ratio of 2.50. The existing tenancy will expire on January 9, 2039, with an option to renew for another 30 years.

CMM will continue to operate at the Mandai Link property as a subtenant, occupying about 70% of the total gross floor area for a maximum of two years from the date of the temporary occupation permit of the Sungei Kadut property.

With the group’s expansion over the years, the Mandai Link property, originally designed to support approximately 50 supermarkets, is no longer able to accommodate the group’s growing network of supermarkets in Singapore. This has impacted the group’s operational efficiency.

However, with a land area 2.5 times bigger than the Mandai Link property, the Sungei Kadut property has the capacity to support at least 120 supermarkets. This aligns with the group’s target of adding three new stores each year over the next 10-15 years.

The Sungei Kadut property will also feature multiple temperature-controlled storage zones with integrated food processing capabilities. The group plans to invest in advanced warehousing and distribution automation, utilizing technologies such as automated storage and retrieval systems (ASRS), robotics, and smart inventory management.

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The land rent payable to JTC is estimated to cost $520 million over the 33 years lease terms. Sheng Siong plans to fund this through internally generated resources and external financing sources such as borrowings.

On September 25, Sheng Siong’s shares closed at $2.11, 0.476% higher.