Aims Apac Reit charged about S$450,000 by JTC after tenant, Cocoa Trees owner, sublets Hougang space

[SINGAPORE] FNA Group, the owner and operator of chocolate retailer The Cocoa Trees, has paid about S$450,000 to its landlord Aims Apac Reit, after it was found to have sublet industrial units at its headquarters in Hougang without authorisation.

The real estate investment trust (Reit) was found to have breached JTC lease conditions for the building it holds in Defu Lane.

It was asked to pay a regularisation fee of about S$450,000, which FNA Group has paid to Aims Apac Reit.

At least 10 tenants took up space at the FNA Group Building at 103 Defu Lane 10 since 2016, a source familiar with the matter told The Business Times. Over this period, FNA Group collected at least S$3.5 million in rent, the source said. 

BT understands that following an anonymous tip-off, JTC inspected the building in February 2025 and discovered that units had been sublet without authorisation. 

The agency adjusted the regularisation fee downwards to account for how some of the sub-lessees at 103 Defu Lane had vacated the premises earlier. The fee was paid sometime in October. 

In response to queries from BT, JTC said it leased the building to Aims Apac Reit and permission was granted to the Reit to sublet the site to FNA. 

“FNA proceeded to effect a secondary sublet to other parties. Aims Apac Reit breached the lease conditions by failing to ensure that FNA did not further sublet.”

Aims Apac Reit was asked to pay a regularisation fee and evict the unauthorised secondary subtenant within a given time frame, JTC stated. 

In response to queries from BT, an FNA Group spokesperson said it has complied fully with JTC on the matter. 

The spokesperson noted: “The sub-tenancy arrangement has since been terminated, the regularisation fee as determined by JTC has also been paid in full.

“Our lease with Aims Apac Reit remains active, and all matters arising from the review have been fully resolved with no outstanding matters.”

Aims Apac Reit’s manager said it takes compliance with all lease conditions seriously and conducts regular reviews to ensure that tenants meet their obligations.

“The arrangement in question was not disclosed and did not involve visible changes, which made detection difficult. Once the arrangement was highlighted, we immediately sought to rectify the issue in consultation with JTC.”

BT understands that FNA was “not aware” tenants had to seek approval for subletting. Some of the units were sublet during the Covid-19 pandemic when FNA faced business challenges. 

The FNA Group Building is a six-storey industrial building zoned Business 1, with a gross plot ratio of 2.5. It has about 18 years left on its 60-year lease. 

For the first half of financial year 2026, Aims Apac Reit posted a 1.1 per cent increase in distribution per unit to S$0.0472, from S$0.0467 in the year-ago period, the Reit manager announced on Wednesday (Nov 5).

According to the Reit’s latest financial results, 103 Defu Lane was 100 per cent occupied. FNA did not say how much space it occupied in the building and how much was sublet. 

A source, who declined to be named, said: “The outcome – a ‘regularisation fee’ of about S$450,000 – appeared unusually lenient, considering the scale and duration of the violation.” 

JTC lessees must use 100 per cent of their gross floor area (GFA) for their own business operations. 

“If there is temporary excess space, the lessee must seek JTC’s permission before subletting. Subletting is generally only allowed for up to 30 per cent of the total GFA,” said JTC. 

However, if a lessee is subletting to a related business, they are not restricted to the 30 per cent GFA cap. A related business is a business for which either the lessee owns more than 50 per cent of the shareholding or the related business owns more than 50 per cent of the lessee, according to the agency’s website. 

A lessee cannot sublet without JTC’s permission.

“This would be a breach of the tenancy agreement and can result in termination of tenancy. A subtenant cannot further sublet the premises; secondary subletting would also be a breach of (the) tenancy agreement,” JTC said. 

Based on JTC’s website, the fee for subletting to unrelated entities is calculated by dividing the sublet area by the total GFA, and multiplying it by the land area and JTC’s land rental rate per annum. This sum is then divided by 12 to obtain the sublet fee per month.

 It is then multiplied by 30 per cent for timely applications, or 100 per cent for late applications or false declarations. 

For subletting to related entities, no fee is payable for timely applications. For late applications, the lessee will pay a flat fee of S$1,100. 

When asked how JTC determined the regularisation fee, a JTC spokesperson said the fee was not imposed on FNA or based on FNA’s rental income, as FNA is not JTC’s lessee.

The agency said: “JTC takes a serious view of breaches of our tenancy agreements. We will continue to review the sublet policy and conduct enforcement actions.”