JTC in S$46.2 million buyback of Mercedes-Benz logistics property in Tuas

MERCEDES-BENZ Singapore is selling the balance lease of its property at 301 Jalan Ahmad Ibrahim to JTC Corporation.

JTC is paying S$46.2 million to buy back the balance lease term of 16 years and five months for the 403,401 square foot (sq ft) site, and the two-storey logistics building on it.

The property has significant redevelopment potential. Its existing gross floor area (GFA) is 459,278 sq ft, but can be expanded by 105,483 sq ft; the maximum allowable space is 564,761 sq ft, based on the 1.4 plot ratio for the site, which is zoned as Business 2 under the Urban Redevelopment Authority’s latest Master Plan.

The property, located near the Second Link and Tuas Port, has two entrances – one along Jalan Ahmad Ibrahim and the other in Tuas Avenue 1.

Mercedes-Benz Singapore declined comment.

A regional logistics centre for Mercedes-Benz passenger cars began operating in the Jalan Ahmad Ibrahim building in 2002, back when the company was known as DaimlerChrysler South East Asia.

Industry observers have linked Mercedes-Benz’ sale of the property to the German group now operating a regional parts logistics centre for Asia-Pacific in Senai Airport City, Johor. The centre manages and distributes replacement spare parts and accessories for after-sales service in a string of countries.

The regional logistics hub for Daimler Truck South East Asia moved out of 301 Jalan Ahmad Ibrahim, and since June, has operated out of 93 Tuas Bay Drive under a five-year contract with TVS Supply Chain Solutions.

Daimler spun off its commercial vehicle business into a separately listed entity, Daimler Truck Holding, and floated it on the Frankfurt Stock Exchange in December 2021. In February the following year, Daimler renamed itself Mercedes-Benz Group (MBG) to renew its focus on its luxury car brands and its van business. It still holds a minority stake in Daimler Truck.

MBG wholly owns Mercedes-Benz Singapore, which was incorporated in January 1990 as Mercedes-Benz Asia. In June 1999, Mercedes-Benz Asia was renamed DaimlerChrysler South East Asia, and then again renamed Daimler South East Asia in October 2007. The company took its current name in October 2022.

JTC issued a 30 year-lease on the 301 Jalan Ahmad Ibrahim site from April 1, 2001, to the Singapore branch of Caterpillar Logistics Services to develop a logistics facility for DaimlerChrysler. The site lease came with a further term of 10 years, taking the expiry date to April 1, 2041.

In December 2021, the property was sold by the Singapore branch of Neovia Logistics Services (the former Caterpillar Logistics Services) to Daimler South East Asia.

In September last year, CBRE announced its appointment as the exclusive marketing agent for the sale of 301 Jalan Ahmad Ibrahim, to be conducted by private treaty. The price was stated at about S$50 million; the owner was not identified.

JTC approved just 5% of the 600 buyback applications in last decade

A JTC spokesperson told The Business Times that in the past 10 years, about 600 lessees of its industrial sites had approached it to explore a buyback of their sites. “Of the 600 cases, JTC bought back 30 sites,” she noted.

The 600 applications included leases that, under a policy implemented in recent decades, are bound by a clause allowing JTC to be the first party to explore a buyback if a lessee is keen to dispose of its property.

JTC has also been approached by companies with older leases that are not bound by such a clause.

“All buybacks are considered on a case-by-case basis, to better support land planning and facilitate opportunities to rejuvenate and optimise our industrial land and estates,” said the spokesperson.

“Such discussions with companies are conducted on a willing-seller, willing-buyer basis, with the valuation of the balance lease term of the property assessed by an independent private valuer,” she added.