SINGAPORE – The anchor tenant of Myer Centre Adelaide, Starhill Global Real Estate Investment Trust’s (Starhill Global Reit) mall in South Australia, has launched arbitration proceedings to claim unspecified damages as well as seek entitlement to terminate its lease, which otherwise runs till June 2032.
Department store chain Myer said that its landlord has breached, and is continuing to breach, its lease terms by maintaining the mall in a condition where it is “substantially empty of suitably presented retail stores”.
Myer occupies about 52 per cent of Myer Centre Adelaide’s net lettable area as at the end of 2022.
Starhill Global Reit’s manager on Thursday said it considers Myer’s arbitration move “ill-founded”, and will “take all steps necessary to vigorously defend” the claim.
The Reit acquired Myer Centre Adelaide in 2015 through its special purpose Australian unit trust for A$288 million – worth about S$303.1 million at the time of completion.
The asset is held by a sub-trust in Australia, which is wholly owned by the Reit.
Addressing the latest arbitration proceedings launched by Myer, Starhill Global Reit’s manager said its sub-trust has “retained experienced legal counsel”.
As arbitration proceedings are in the early stages and are expected to take over 12 months to conclude – and considering that Myer has been making payment of rent under its lease – the manager said this is unlikely to have a material impact on the Reit’s distributable income for the current financial year ending June 30, 2023.
Myer Centre Adelaide’s valuation of $239.3 million accounted for about 8.3 per cent of Starhill Reit’s total portfolio valuation as at end-June 2022.
The lease held by Myer, which generates an annual revenue of about $13.7 million, contributed to 7.4 per cent of the Reit’s total portfolio revenue for financial year 2022, as well as 9 per cent of net property income for the same year.
Units of Starhill Global Reit were trading down 0.5 cent, or 1 per cent, at 51.5 cents as at 10.32am on Thursday. THE BUSINESS TIMES
