Can The Singapore Flyer Fly Again Under Straco Corporation Ltd?

The Singapore Flyer, an iconic symbol of Singapore, to some, it is now a bitter reminder of how things can go wrong. The Singapore Flyer was built for S$240 million but fell into receivership back in May 2013 when it failed to meet its financial obligations. In an interesting turn of events, Straco Corporation Ltd (SGX: S85) announced last month that it will be the buying the Singapore Flyer for S$140 million in an attempt to turn the asset around.

So, can the Singapore Flyer really fly again?

The partner

Straco Corporation Ltd is taking over the asset with a partner, WTS Leisure. WTS Leisure, one of the largest local tour operators operating more than 350 tour buses in the country, will have a 10% stake in the flyer.

Its choice of partners might be an indication on how Straco Corporation is planning to boost the volume of visitors to the Singapore Flyer.

Currently, the Flyer has two revenue streams, one from the ticket sales of the Flyer itself and the other from the rental for retail outlets surrounding the Flyer.

Both ticket sales and rental income go hand in hand. Without a critical mass of visitors, it is harder to attract good quality tenants and charge more for rent at the retail outlets. According to a news report by The Edge Singapore, it seems that the rental rate of the tenants now is below the market rate, and there is still a sizable amount of unused commercial space in the property.

Foolish Takeaway

At this point, it certainly looks like a long shot for Straco Corporation to turn the Singapore Flyer around. However, we do note that  Straco Corporation has a track record as a tourist operator.

Until the company releases its future plans, investors have little information to rely on for the future of the Singapore Flyer. We at The Motley Fool Singapore will be helping you to track the latest developments on this deal. To keep up to date on the latest financial and stock news, sign up for a FREE subscription to The Motley Fool’s weekly investing newsletter, Take Stock Singapore. It will teach you how you can GROW your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns Straco Corporation Ltd