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Cache Logistics Trust dragged into tenant's rental dispute with logistics giant Schenker
ARA-CWT Trust Management (Cache) Ltd, the manager of warehouse owner Cache Logistics Trust, has been dragged into a dispute over rental at one of its major properties owned as tenant C&P Land is squabbling with sub-tenant Schenker, a German logistics giant, over rent issues.
The property concerned is the Schenker Megahub at 51 Alps Avenue. It is the largest freight and logistics property located at the Airport Logistics Park of Singapore by Changi Airport and was valued at S$116.8 million at end-2015.
The property was purpose-built for Schenker Singapore Pte Ltd, which has been the anchor end-user for more than five years.
C&P Land holds the master lease that expires at the end of August this year. Schenker is the end-user occupying the property in an anchor lease agreement with C&P that also expires at the same time.
The crux of the conflict is that Schenker wants to renew its anchor lease at a rental rate pre-agreed between C&P and Schenker when the original anchor lease agreement was entered into on June 8, 2005. But C&P said Schenker does not have a valid option to renew. The pre-agreed rental rate is understood to be below the current market rental rate.
The manager of Cache said it has received a summons from Schenker seeking a declaration that the anchor lease agreement is binding upon itself and trustee HSBC Institutional Trust Services (Singapore), among other things.
Cache said it "intends to vigorously defend itself in this action" on the basis that the dispute is between its tenant C&P and the tenant's sub-tenant Schenker. Cache said it is prepared to renew C&P's master lease, but if C&P does not do so or delivers vacant possession of the property after the lease expiry in August, it plans to claim against C&P double the amount of the rent payable under the master lease, or damages, due to Schenker remaining on the property.
Cache last traded at S$0.86.