Soildbuild Business Space REIT (Soilbuild REIT) has formally terminated the lease with Technics Offshore Engineering on 72 Loyang Way.

The lease, which has been the subject of a legal action between the REIT and its former tenant, was terminated with effect from 9 December 2016.

Soilbuild REIT commenced legal action against Technics Offshore engineering in mid-2016 after the latter defaulted on its rent payment, for an outstanding amount of SGD2.19 million (USD1.5 million).

In addition to the outstanding amount, the Singapore-listed industrial REIT also received SGD11.8 million in cash after claiming a bank guarantee equivalent to 18 months of rent for its property, as a result of the default.

As of 9 December 2016, SGD3.9 million of this bank guarantee, which is equivalent to approximately five months’ rent and property operating expenses, remains unused, said the REIT.

Soilbuild REIT is now looking for new tenants to lease 72 Loyang Way.

“If the manager is unable to find a new tenant willing, and able to pay a similar rent under the lease agreement prior to the full utilisation of the security deposit, there would accordingly be an impact on Soilbuild REIT’s distribution per unit”, said the REIT in a statement.

72 Loyang Way is a seafront industrial property that was acquired by Soilbuild REIT in mid-2015 from Technics Offshore Engineering for SGD97 million in a sale-and-leaseback arrangement.

The agreement was for Technics to rent the property for a term of 15 years at SGD7.87 million per year, with a rental escalation of up to 2.25% every year starting from year three.

The property has a remaining tenure of about 21 years.

Units of Soilbuild REIT finished the trading day about 0.7% higher from its previous close on the Singapore Exchange to end at SGD0.65.