Sabana Shari’ah Compliant Industrial Real Estate Investment Trust (Sabana REIT) had issued a notice of termination to Adviva Distribution, the tenant at 10 Changi South Street 2, on 31 August due to the “tenant’s failure to pay rent and other sums payable under the lease agreement”.
The tenant owes Sabana REIT $2.14 million in rental arrears.
In an SGX filing, the trust revealed that it intends to set off the tenant’s outstanding rental arrears and damages against “the total monies of $3,580,226.66 held by Sabana REIT in relation to the property, which comprises the security deposit provided by the tenant and other amounts that may be payable to the tenant for works done on the property”.
It noted that the manager’s board of directors has sought legal advice in relation to the matters. In fact, the tenant had been issued two letters of demand on 12 July 2018 and 8 August 2018.
“The manager continues to explore all legal options to seek full compensation arising from the breach of the lease agreement. Further, the manager has already shortlisted, and is in active negotiations with, prospective replacement tenants for the Property, subject to the JTC Corporation’s approval,” said Sabana REIT.
At this juncture, Sabana REIT expects no writebacks “for the revenue already booked under the property, nor are impairment expenses necessary for the coming quarter”.
“The manager continues to proactively work to resolve the matter with the tenant, while concurrently seeking a suitable replacement tenant,” it added.
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