Cogent

Cogent has finally secured the long awaited approval from JTC to develop Phase 1 of its Jurong Island Chemical Logistics facility (JICL).

The two-phase development will occupy up to 6-ha of land, with a total built-up area of about 150,000 sqm. The specifications suggest that JICL could replicate the design of its existing Cogent 1. Logistic Hub (C1.LH), which integrates five floors of warehouse space with a patented roof top container depot concept.

As previously highlighted, JICL could add $15.4m to the group's net operating profit from 2019 onwards, based on 2015 market warehouse rental and occupancy. This is equivalent to 55% of Cogent's FY15's NOPAT.

For phase 1, a 3.5-ha land plot at Tembusu Crescent will be allocated to Cogent at preferential land cost, similar to the case of C1.LH.

Development for the 1st phase of JICL will need to be completed within three years from Apr '17, and upon completion, the group will be granted a 30-year lease to operate the facility on condition that it will be used for container depot, warehousing or other logistics related services only.

As for phase 2, the group can apply to JTC for land allocation of the remaining 2.5-ha no later than four year after phase 1 commences operations. Despite the maximum timeframe of seven years, the terms do not seem to prevent Cogent from applying phase 2 earlier, as the group previously only took about two years to build the C1.LH.

Separately, the logistics service provider will also be applying for Land Intensification Allowance (LIA) from Economic Development Board (EDB) for the phase 1 development, which could yield substantial tax benefits going forward.

With the approval for JICL, Cogent will now be in a stronger position to showcase its rooftop depot design to other interested parties, and potentially monetising the intellectual property.

The group will update on the LIA application status, as well as potential development costs at a later date.