Sabana Shari'ah Compliant Industrial Real Estate Investment Trust (Sabana Reit) announced it had issued a notice of termination on Aug 31 to Adviva Distribution, the tenant at 10 Changi South Street 2, due to the tenant's "failure to pay rent and other sums payable" under the lease agreement.
In a late Friday filing, Sabana Reit said the tenant owes $2.14 million in rental arrears.
"Sabana Reit intends to set off the outstanding rental arrears and damages owed to it by the tenant 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," the Reit said.
Sabana Reit added that the managers' board has sought legal advice in relation to this matter and two letters of demand were issued to the tenant this year on July 12 and Aug 8.
The board has already shortlisted and is in active negotiations with prospective replacement tenants for the property.
"At this juncture, no write-backs are expected 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," Sabana Reit said in its statement.