Rent now, pay later

Reserved: Far East Organisation has set aside 45,000 sq ft of space in 6 of its malls, such as ORchard Central, for prospective tenants. (PHOTO: Far East Organisation)

Far East scheme gives tenants space in return for shares

FANCY setting up shop in a mall and being able to defer rent for up to three years?

An initiative by Far East Organization will soon allow eligible tenants to have their pick of shop spaces from six of its malls, in exchange for shares that can later be redeemed or converted.

A total area of 45,000 sq ft equivalent to the space of more than 40 five-room flats has been set aside at Central, Far East Square, Orchard Central, Pacific Plaza, Square 2 and West Coast Plaza under the rental-equity programme.

The scheme was announced yesterday morning before Orchard Central's soft-launch party. The mall will hit 85 per cent tenancy by September, said Far East retail-management director Susan Leng.

Asked if the programme was designed to ramp up occupancy rates, Mr Eddie Yong, executive director of Far East's investment properties, rubbished the suggestion.

Mr Yong, who is also chief executive of the organisation's corporate-real estate business group, said: "We're allocating only 5 per cent of rental space in six malls to the scheme."

Tenants under the programme are assessed according to criteria such as the potential of their businesses and how it can enhance the mall's offerings.

The initiative is aimed at retailers and prospective tenants who may be put off by the uncertainty over the economy.

Mr G.L. Yap, Far East's executive director of property services, said: "This programme came about partly because of the economic situation around the world. We know that there are quite a lot of people who are hesitant to start because of the uncertainty that lies ahead."

Mr Yong added: "We see lowering the entry barrier for prospective tenants who have exciting brands or concepts as our part in a proactive partnership."

Mr Don Lim, 50, owner of eatery Don's Pies, is considering the possibility of using this scheme to expand his business.

He said: "This programme is very good. For a business to start up, there's equipment that needs to be bought and everything costs money. With rents being high everywhere nowadays, you can't do anything."

Mr Lim set up his first shop nine years ago in Far East Square before relocating to China Square Central two years ago.

"There would be no Don's Pies if not for Far East. They charged me very low rent for my 240-sq ft shop with an 80-seat al fresco area when I first started," he said.

Far East is expected to allocate a total of almost $19 million in rental income to the programme over three years.