CAPITALAND Mall Trust (CMT) will redevelop Funan DigitaLife Mall into an integrated development, its manager, CapitaLand Mall Trust Management Limited (CMTML), said on Thursday, before the market opened.
The IT mall has used 3.861 of its allowable gross plot ratio of 7.0, giving it an untapped gross floor area of about 388,000 square feet.
"Given its excellent location and the strong potential for an integrated development on this site, we believe that the redevelopment of Funan DigitaLife Mall will create the greatest value for our unitholders," said Wilson Tan, CEO of the trust's manager.
According to him, the new building will be developed as an "aspirational lifestyle destination".
The mall is expected to close in the third quarter of 2016, with redevelopment works starting soon after and taking about three years.
CMTML will "continue to refine the concept for the new integrated development and share further details in due course", it said.
OCBC Investment Research's Andy Wong noted that Funan DigitaLife Mall contributed 5.1 per cent to CMT’s FY2014 gross revenue and 4.8 per cent to its net property income.
"This move by CMT does not come as a surprise to us, as management had previously guided the market that it was exploring options to unlock the value of the mall, and this may come in the form of a redevelopment or divestment," said Mr Wong in a note on Thursday.
"Pending further details to be shared in due course, we maintain our "buy" rating and S$2.09 fair value estimate on CMT."
As at 10.22am on Thursday, CMT's units were 4.5 Singapore cents lower at S$1.875.