The manager of Starhill Global REIT P40U % says it had received a notice of arbitration from Myer in relation to the lease held by the department store chain at the Myer Centre Adelaide.
The notice was received by the REIT’s trustee on March 23.
Myer occupies about 52% of the centre’s net lettable area (NLA) as at Dec 31, 2022.
According to the REIT’s filing, Myer is alleging that there has been a breach of its lease which currently runs till June 2032. As such, it is claiming unspecified damages and that it is entitled to terminate its lease.
In its claim, Myer says the landlord has breached and is continuing to breach the lease by “maintaining the Myer Centre Adelaide in a condition whereby it is substantially empty of suitably presented retail stores”.
In its statement, the REIT manager says the arbitration claim is “ill-founded” and that it will “take all steps necessary” to defend the claim. The landlord has also retained experienced legal counsel.
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The claim is at an early stage and the arbitration process is expected to take around or more than 12 months before concluding.
As Myer has been making payment of rent under its lease, the REIT manager does not consider that the claim will have a material impact on the REIT’s distributable income for the FY2023 ending June 30.
Myer Centre Adelaide’s valuation of $239.3 million accounted for 8.3% of the REIT’s total portfolio valuation as at June 30, 2022. The lease contributed some 7.4% to the REIT’s total portfolio revenue and 9.0% to its net property income (NPI) for the FY2022 ended June 30, 2022.
As at 9.20am, units in Starhill Global REIT are trading flat at 52 cents.