Berlin Campus tenant alleges that dilapidation costs to reinstate the property back to its original state are unjustified
[SINGAPORE] IReit Global is facing a potential litigation suit from its tenant, which alleged that dilapidation costs agreed to earlier are “unjustified”, it announced in a bourse filing on Monday (Jul 28).
Deutsche Rentenversicherung Bund (DRV), the main tenant of the Berlin Campus, had agreed to pay IReit a lump sum of 15.5 million euros (S$23.2 million) as dilapidation costs to reinstate the property back to its original state.
On Jun 12, DRV sent a legal letter to IReit’s subsidiaries claiming partial repayment of the dilapidation costs of 8.4 million euros. It said the the costs were “unjustified as as the provision in the lease agreement that establishes the obligation to carry out any renovation works to reinstate the property is invalid”.
IReit Global’s manager has engaged legal counsel who view that the claim is unlikely to succeed legally, and that IReit has a high chance of defending the claim. A formal response rejecting the claim was sent on Jun 25.
No court-initiated proceedings have been served to any subsidiaries.
The claim is about 1.6 per cent of IReit’s net asset value and 11.1 per cent of gross revenue for FY2024. With the legal counsel’s view that the claim can be successfully defended, the manager’s view is that no provision for the claim is required by IReit as at Jun 30.
Units of IReit closed unchanged at S$0.30 on Monday.
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