Singapore-listed industrial REIT, Soilbuild Business Space REIT, announced on 20 May that it has received a writ of summons from the tenant located at 72 Loyang Way, Technics Offshore Engineering Pte Ltd, and its guarantor, mainboard-listed Technics Oil & Gas Limited.
The writ of summons is being issued in relation to a legal action initiated by Soilbuild REIT against Technics Offshore Engineering over a sum of SGD2.19 million for the tenant’s default in payment of rent, a security deposit for the second year of lease amounting to SGD11.8 million, and other costs.
Soilbuild REIT’s trustee, DBS Trustee Limited, currently holds a bank guarantee amounting to SGD11.8 million, which is equivalent to 18 months’ rent, as security deposit from the tenant and its guarantor.
“The tenant and the guarantor are claiming unlawful conspiracy regarding the sale and leaseback transaction of 72 Loyang Way, and are seeking injunctions to restrain any call by the trustee on the bank guarantee”, said Soilbuild REIT in a statement on the legal action.
The REIT denies the charges of an unlawful conspiracy and has said that it intends to “vigorously defend” against the charges made. “The manager will release further announcements as necessary on this matter”, it added.
72 Loyang Way is a property that was acquired by Soilbuild REIT in mid-2015 from Technics Offshore Engineering for SGD97 million in sale-and-leaseback scheme. The agreement was for Technics to lease the property for a term of 15 years with rent payable for the first year set at SGD7.87 million, and a rental escalation of up to 2.25% every year starting from year three. The property has a remaining tenure of about 22 years.
Units of Soilbuild Business Space REIT are currently trading on the Singapore Exchange at SGD0.68.