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Sabana Reit's Changi South former tenant to pay S$2.99m in lease settlement

THE former tenant of Sabana Shari'ah Compliant Industrial Real Estate Investment Trust's (Sabana Reit) 10 Changi South Street 2 property is paying a total sum of S$2.99 million as a full and final settlement following a lease termination.

This will see the former tenant Adviva Distribution paying the full amount to Sabana Reit’s trustee HSBC Institutional Trust Services (Singapore), the Reit said on Thursday night in a regulatory update.

The lease termination date was also brought forward to July 18 from Dec 12, following a mutual agreement by both parties.

Sabana Reit said it does not expect any material adverse financial impact on its distribution per unit for the current financial year arising from the lease termination.

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"To safeguard the interests of its stakeholders, the manager has been and will continue to engage in active negotiations with prospective replacement tenants for the property," its manager added.

In March, the trustee received a "notice of special event" from Adviva Distribution, which underwent an ownership change and is now wholly-owned by Meztoire. Lease terms allow the tenant to terminate the lease by giving no less than nine months’ notice.

Previously in Sept 24, 2018, Sabana Reit said it received some S$2.15 million via a cashier's order from Adviva Distribution that will go towards outstanding rental arrears and late payment charges.

This was after an agreement was entered on Sept 21, 2018, to vary the terms of the lease agreement, which allows the Reit's trustee to mitigate occupancy risks by bringing in direct sub-tenants, subject to statutory board JTC Corp's approval, its manager said at the time. 

Sabana Reit had previously issued a notice of termination on Aug 31, citing a failure to pay rent on the property, which contributed 6.5 per cent of the Reit's gross revenue for the quarter to June 30.

Sabana Reit units closed unchanged at 45.5 Singapore cents on Thursday, before the announcement on the early lease termination was made.