Singapore-listed industrial REIT, Cache Logistics Trust, has inadvertently found itself in a lease dispute over its property at 51 Alps Avenue between anchor tenant Schenker Singapore Pte Ltd and master lessee C&P Land Pte Ltd.
Schenker Singapore is currently occupying 51 Alps Avenue, one of the largest property in the Airport Logistics Park, under an anchor lease agreement that expires in August 2016 with C&P Land. C&P Land is in turn renting the property from Cache Logistics Trust under a master lease.
Schenker Singapore has indicated its intention to renew its anchor lease agreement with C&P Land for a period of five years at a rental rate that was pre-agreed upon in June 2005 when the lease was negotiated by Bax Global. Bax Global has since been acquired by DB Logistics and integrated into Schenker.
However C&P Land is of the view that Schenker Singapore does not have a valid option to renew the lease at the pre-agreed rate. Cache Logistics Trust is also of the view that this pre-agreed rental rate is below prevailing market rates.
The REIT announced on 31 May that it has now received an originating summons from Schenker Singapore seeking a declaration that the original anchor lease agreement is binding and that it will have the option to renew its lease on the property at the pre-agreed rental rate.
Cache Logistics Trust has said that it intends to “vigorously defend itself in this action” as it is not a party to the lease agreement between C&P Land and Schenker Singapore. The master lease agreement (MLA) between C&P and Cache Logistics Trust will also expire in August 2016.
“If C&P does not renew the master lease and fails to deliver vacant possession of the property upon the expiry of the master lease, in accordance with the terms of the MLA, Cache intends to claim against C&P for double the amount of rent payable under the MLA for the duration of the holding over period or damages arising as a result of Schenker remaining on the property”, said Cache Logistics Trust in a statement on the dispute.
Under the terms of the MLA, C&P Land has provided a security deposit amounting to 12 months of master lease rental. The REIT has said that it will be making relevant announcements when there are material developments regarding the dispute.
Units of Cache Logistics Trust are currently trading on the Singapore Exchange at SGD0.86.