Sabana Reit ends spat with Changi South tenant

Sabana Reit has received a cashier's order from the tenant of 10 Changi South Street 2, Adviva Distribution, for some $2.15 million.
Sabana Reit has received a cashier's order from the tenant of 10 Changi South Street 2, Adviva Distribution, for some $2.15 million.PHOTO: EPA-EFE

Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) should not take a material hit to its distribution per unit (DPU) over a property in Changi, after receiving a payment that will go towards outstanding rental arrears and late payment charges, the manager said yesterday.

It added that the Reit trustee and the tenant of 10 Changi South Street 2 entered into an agreement on Sept 21 to vary the terms of the lease agreement, which will allow the trustee to mitigate occupancy risks by bringing in direct sub-tenants, subject to statutory board JTC Corp's approval.

Sabana Reit has received a cashier's order from the tenant, Adviva Distribution, for some $2.15 million, said the manager. It had previously issued a notice of termination on Aug 31, citing a failure to pay rent on the property, which contributed 6.5 per cent of the Reit's gross revenue for the quarter to June 30.

The manager warned at the time that the Reit's DPU could suffer by as much as 0.05 cent for the fourth quarter of this year, should the lease be terminated without a replacement tenant.

But it has now said it does not expect any material adverse financial impact on the DPU for this financial year, in relation to the property, once the payment is applied to the rental arrears.

Under the variation of lease agreement, there will be no reduction in the fixed rent payable by Adviva Distribution. The tenant also agreed to perform all of its obligations under the amended lease agreement, if these obligations are not carried out by the direct sub-tenants.

A version of this article appeared in the print edition of The Straits Times on September 25, 2018, with the headline 'Sabana Reit ends spat with Changi South tenant'. Print Edition | Subscribe