Chapter 6: Managing Industrial Property

Question 1

Classification of Industrial Properties

Answer 1

• Business 1
• Business 2
• Business Park

Question 2

Business 1 (B1)

Answer 2

• used for industry, warehouse, utilities and telecommunication uses
• relevant authorities (NEA) does require a nuisance buffer greater than 50m.

Question 3

Business 2 (B2)

Answer 3

• for industry, warehouse, utilities and
  telecommunication uses
• business uses will be will be imposed with nuisance buffer more than 50m and within health and safety buffers

Question 4

Business Park

Answer 4

• used for non-pollutive industries
• engage in high technology, research and development, high value-added and knowledge intensive activities

Question 5

Types of Industrial Property

Answer 5

• conventional
• high-tech
• business park

Question 6

Conventional Industrial Property

Answer 6

• make up most of JTC standard factories
• as well as flatted factories by private developer
• main provision: loading & unloading and parking of lorries.

Question 7

High-Tech Industrial Property

Answer 7

• improvement made to conventional buildings to cater to high tech industries

Question 8

Business Park Definition (physical qualities)

Answer 8

• a development with good quality buildings of a reasonable size, attractive landscaping & social facilities

Question 9

Physical Characteristics of Business Parks

Answer 9

• High priority on work environment in terms of the quality of landscaping
• ample parking space as they have qualified, middle class workers who drive to work
• Strategically located along highways and in proximity to residential areas
• park usually designed to take advantage of natural features.
• size can vary from 10 hectares to 1000 hectares

Question 10

types of tenants of Business Park

Answer 10

• bio-technology
• test lab
• software development
• research & development

Question 11

Management of Business Parks

Answer 11

• flexible estate management are essential
• Good tenant relations
• High degree of daily maintenance
• management acts as facilitator between companies and park
• maintenance
• management centralized * managed by professional body

Question 12

what does it mean by flexible estate management

Answer 12

• short leases
• replacement lease for larger premises

Question 13

what does it mean by maintenance in business parks?

Answer 13

• retain unique identity, prestige, and quality

Question 14

what does it mean by high degree of daily maintenance?

Answer 14

• landscaping
• security

Question 15

what does it mean by good tenant relations

Answer 15

• close contact
• informal lunches, meetings

Question 16

is management of a business park property just collecting rent?

Answer 16

• no
• also need to know detailed operation of the highly technical companies
• must be a rapid response to all enquiries and foreseeing companies’ future requirements before even they themselves are aware of them.

Question 17

Types of industrial leases

Answer 17

• ground lease
• sale & leaseback agreement

Question 18

what is ground lease

Answer 18

• agreement between a landlord and a tenant for the lease of vacant land
• is long term lease

Question 19

what is an important provision of ground lease?

Answer 19

tenant’s promise to erect a building on the vacant land which reverts to the landlord together with the land upon expiration of the lease

meaning tenant build building, and after lease ends building also go back to landlord

Question 20

what is the sale & leaseback agreement

Answer 20

• current owner & user of commercial property decide to offer property for sale
• but only on condition that buyer simultaneously enter into a lease which current owner retains right to use & possess property

Question 21

net leases:

Answer 21

• single net
• double net
• triple net

Question 22

what expenses are paid by who in a single net lease

Answer 22

tenant: rent + property tax
owner: maintenance + other operating expenses

Question 23

what expenses are paid by who in a double net lease

Answer 23

tenant: rent + property tax + proportionate property tax insurance

owner: external expenses of repairs & maintenance

Question 24

what expenses are paid by who in a triple net lease

Answer 24

tenant: rent + property tax + insurance + common area maintenance + repairing expenses

owner: nothing :D

Question 25

single tenant buildings (STB)

Answer 25

• mainly consists of one main/head tenant mostly obtained via a sale and
  leaseback arrangement
• double or triple net basis
• since REIT company lease than it is REIT’s property manager’s duty to ensure certain contractual obligation & compliance matters are met
• sub-tenants can be engaged by the head tenant but only the head tenant has to deal with the sub-tenants directly. This is because sub-tenants have no contractual obligations with the REIT company.
• but REIT has to know existence of the sub-tenants

Question 26

what is the ratio of anchor sub tenant : non-anchor sub tenants

Answer 26

70 : 30

Question 27

Multi-Tenant Buildings (MTB)

Answer 27

• common areas are managed by the REIT company themselves
• done either by having it self-managed via engaging multiple service contracts or through the appointment of Managing Agent (MA)

Question 28

how do you make engagement of service contractors/ MA

Answer 28

• call tenders & have contractual arrangement with REIT company
• duration of engagement can range from a minimum of 1 year to 3 three years max.
• contractual obligations comprise duties and obligations mostly related to facilities management and other administrative duties and functions as directed by the REIT company.