Starhill Global Reit in dispute with Myer over Adelaide mall lease
THE anchor tenant of Starhill Global Real Estate Investment Trust’s (Starhill Global Reit) mall in South Australia, Myer Centre Adelaide, 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 end-2022.
Starhill Global Reit’s manager on Thursday (Mar 23) 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 (S$256.9 million) – worth about S$303.1 million at the time the deal was completed.
The asset is held by a sub-trust in Australia, which is wholly owned by the Reit.
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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 Jun 30, 2023.
Myer Centre Adelaide’s valuation of S$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 S$13.7 million, contributed to 7.4 per cent of the Reit’s total portfolio revenue for FY2022, as well as 9 per cent of net property income for the same year.
Units of Starhill Global Reit : P40U 0% closed on Thursday flat at S$0.52.
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