Sheng Siong Enters Agreement Jtc Lease Sungei Kadut Property Bigger Warehouse And Distribution
Sheng Siong Group, a prominent company in the retail industry, has recently signed a lease agreement with JTC Corporation to establish a new warehouse, distribution centre and headquarters at Sungei Kadut. This development is the result of a letter of offer received by Sheng Siong’s wholly-owned subsidiary, CMM Marketing Management, from JTC in August. The lease term for the land, which spans 61,297 square metres, is set at 33 years.
Currently, CMM operates from a property at Mandai Link with a land area of 25,005 square metres and a maximum gross plot ratio of 2.50. However, the existing tenancy is set to expire on Jan 9, 2039, with an option for renewal for another 30 years. As such, the group has decided to move to the Sungei Kadut property in order to better accommodate its growing operations.
According to Sheng Siong, the Mandai Link property was originally designed to support approximately 50 supermarkets. However, with the group’s continued expansion, the current facility is no longer sufficient and is expected to negatively impact operational efficiency. In contrast, the Sungei Kadut property, which is 2.5 times larger, will have the capacity to support at least 120 supermarkets, aligning with the company’s goal of adding three new stores every year for the next decade or so.
The Sungei Kadut property will boast multiple temperature-controlled storage zones and integrate food processing capabilities. Furthermore, Sheng Siong plans to invest in advanced warehousing and distribution automation, leveraging technologies such as automated storage and retrieval systems (ASRS), robotics, and smart inventory management.
The company estimates that the land rent payable to JTC will amount to around $520 million over the 33-year lease term. It plans to finance this through a combination of internally generated resources and external sources, such as borrowing.
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On Sept 25, shares in Sheng Siong closed 1 cent higher or 0.476% up at $2.11. This strategic move by the company is expected to further strengthen its position in the retail industry and drive future growth.