Tag Archives: Ngee Ann City

Takashimaya wins rent dispute with landlord Ngee Ann Development

The court fight between Takashimaya and its landlord Ngee Ann Development (NAD) over calculation of rent has concluded in favour of the department store.

The High Court, in a written judgment on Wednesday (Sept 14), agreed with Takashimaya’s contention that rental rate for the next five years should be valued based on the existing space configuration.

NAD had sued Takashimaya last year after both sides reached a deadlock on how “prevailing market rental value” in the lease agreement was to be interpreted.

Since 1993, Takashimaya has been the anchor tenant at the Ngee Ann City building, occupying about 56,000 sq m, of which 38,000 sq m is used for its department store and 13,900 sq m is sublet to speciality shops.

In 2013, NAD proposed to revise the rent to $19.83 per square foot (psf) a month, more than double the existing rate of $8.78 psf.

This was based on a valuation report that reconfigured the layout to reduce department store space and increase speciality shop space. The latter commands higher rent.

After Takashimaya rejected the report, they agreed to each nominate one valuer and take the average of the two valuations.

They also agreed that any correspondence to the valuers had to be copied to the other side.

But NAD sent a letter to the valuers, telling them to use a hypothetical configuration, without copying it to Takashimaya, in what it later said was an “administrative oversight”.

Takashimaya, represented by Senior Counsel Alvin Yeo and Ms Lim Wei Lee, insisted that both sides first agree that valuation has to be based on the existing configuration, like how it had been done in previous valuation exercises.

NAD, however, said that rental value is not required to be based on any specific configuration. It sued Takashimaya, seeking to compel it to complete the valuation process.

In her written judgement, Judicial Commissioner Debbie Ong said the terms of the original lease and the intentions of the parties at the time they entered into the lease are the most relevant in interpreting the phrase “prevailing market rental value”.

The judicial commissioner said that the relationship between Ngee Ann and Takashimaya is more like a joint business partnership rather than the typical landlord-tenant relationship.

She noted that while the lease started running in 1993, it was only in 1998 that both sides came to agree on the quantum of rent and the net floor area. She also noted that Takashimaya’s Japan parent company has a 26.3 per cent stake in NAD and has four directors on NAD’s board.

The provisions in the lease reflected the parties’ intentions for their business relationship to continue for a considerable length of time, she said. Takashimaya also had “extensive rights” under the lease.

She found that the intention of both parties at the time they entered into the contract was to have a long-term relationship in which Takashimaya would operate its department store as Ngee Ann City’s anchor tenant and NAD would enjoy strong property values as a result of that.

Given this “somewhat symbiotic relationship”, it would be inconsistent with the parties’ core understanding and agreement for NAD to obtain rent based on the highest and best hypothetical use of the premises even while Takashimaya continues to use nearly 70 per cent of its leased space for its department store.

“The consequence of using such a basis is that Takashimaya would pay far higher rent based on a hypothetical reduced area designated for departmental store use that fails to cohere with its actual use,” she said.

She also urged both sides to “resolve their disputes amicably” in the light of their long-term business relationship.

Starhill Reit raises rents under Ngee Ann City’s Toshin master lease

STARHILL Global Reit on Wednesday announced the new base rents for its Toshin master lease, which is 5.5 per cent higher than the existing rate, and is effective for three years starting June 8, 2016.

The rate is based on the average of three market rental valuations done by independent licensed valuers.

The Toshin master lease accounted for about a fifth of the Reit’s portfolio gross rent in March 2016. It covers all the retail strata area of Ngee Ann City owned by the Reit, except level five. Toshin is also the Reit’s largest tenant.

The master lease to Toshin provides the Reit with potential rental upside every three years. Together with the agreed extension of its Malaysia properties’ master tenancies, whereby the annual rent was revised upwards by about 6.67 per cent, this means that about a third of the Reit’s gross rent has secured an increase starting from June 2016.

The latest rent increase was in line with what some analysts had expected, after the rental dispute broke out between Takashimaya and its landlord, Ngee Ann Development in the High Court.

Ngee Ann is proposing to revise the rent to S$19.83 per square foot per month (psf pm), more than double the rent in 2014 of S$8.78 psf pm. This is superior to the approximately S$15 psf pm rental that Starhill currently gets from Toshin. Analysts had believed that this would give Starhill clout to demand more in its own rent from its master lessee, Toshin.

The Reit owns 27.2 per cent of the share value of the strata lots at Ngee Ann City, with Ngee Ann owning the rest. The dispute does not involve Starhill as the space occupied by Takashimaya is not part of its portfolio.

Opera Gallery remains shut; asks landlord to restore power

Opera Gallery remained shut on Monday, one day after a stand-off with its landlord, Toshin Development, which has the master lease at Ngee Ann City.

On Sunday morning, security guards from Toshin had sealed off the premises and tried to move the artworks worth US$20 million to vacate the unit for a new tenant.

It was not because Opera Gallery did not pay its rent, but according to Toshin, it has a new tenant which provides a better retail mix.

Opera Gallery said that since the standoff, power to the premises has been cut and the alarm system and CCTV cameras needed to protect the artworks no longer work.

Lawyers for Opera Gallery had written to Toshin to ask for the premises to be reopened by this Friday so that they can do an inventory check.

Meanwhile, lawyers on both sides have not reached an agreement on whether or not Opera Gallery can continue operating there.

Source : Channel NewsAsia – 2 Feb 2009

Opera Gallery at Ngee Ann City fights eviction order

A rental dispute turned ugly at Ngee Ann City on Sunday morning. Security was called in to the Opera Gallery – one of the tenants there – to seal off the premises which houses over S$20 million worth of art.

The Opera Gallery had brought in dramatic street art during the F1 race last September. And now it is caught in some drama itself.

Its landlords at Ngee Ann City ordered security to seal off the gallery’s premises after 12 years of operation there.

Explaining the move, Aw Eng Hai, partner at accounting firm Grant Thornton – which is acting for landlord Toshin Development – said: “The tenant had a lease which expired on 31 January 2009. And so upon the expiry of the tenancy, the tenant did not hand over vacant possession back to the landlord. So the landlord had to effect re-entry.”

When Channel NewsAsia asked if the issue arose because the tenant did not pay their rent, Mr Aw said: “No, it is not that they are not paying their rent. The landlord has found a new tenant.”

Toshin Development is the master lessee for about 226,000 square feet of retail space in Ngee Ann City. It is wholly-owned by departmental store operator Takashimaya.

Last March, the gallery was informed that its tenancy agreement will not be renewed.

But seven months earlier – in August 2007 – the landlord allowed the gallery to undergo a S$300,000 renovation.

Lawyers have yet to resolve the dispute.

Stephane Le Pelletier, director, Opera Gallery said: “Just after midnight, the alarm went off because these people decided to break into my premises. I straight away saw that there was some boarding in front of the gallery, and when I stepped into the gallery, I saw that some of our pieces, paintings were already packed.”

Mr Aw explained: “The landlord has already informed the tenant that if they do not remove their valuables from the premises, the landlord will not be liable for any damage.”

Mr Le Pelletier said: “If they have their right as landlord, I am really happy to cooperate. But they have to show me something, they cannot just break into my premises without any court order.”

The landlord said they want the premises back because a new tenant can offer a better retail mix for the mall. Opera Gallery said they have told the landlord that they are willing to raise the rental price.

In the meantime, both sides could not come to an agreement and Opera Gallery’s staff were stuck in the premises since midnight with no electricity and were unable to use the toilets.

After a 12-hour stand-off, the gallery’s staff were exhausted and left the premises.

Lawyers from both sides are still in talks.

Opera Gallery said it has yet to find a new space to move to. It has 10 outlets in the world – including New York, Hong Kong, Monte Carlo and Dubai.

The Singapore outlet was the second to open after Paris.

Source : Channel NewsAsia – 2 Feb 2009

MP REIT secures nearly 20% rent rise for 226,000sf of Ngee Ann City space

Macquarie Prime Real Estate Investment Trust (MP REIT) has secured 19.75 percent higher rent from its tenant Toshin Development.

But when contacted, MP REIT declined to reveal details of the rent, saying it is confidential.

Toshin is the master lessee for about 226,000 square feet of retail space in Ngee Ann City.

The new rent will be locked in for three years from June 8 this year.

MP REIT says this is expected to account for a 7.2% increase in its annualised distribution per unit.

As at 31 March 2008, the Toshin master lease made up a quarter of the gross rent of MP REIT’s portfolio.

MP REIT owns about 27 percent of the strata title interest in Ngee Ann City, comprising 256,000 square feet of retail net lettable area and 141,000 square feet in office net lettable area.

The Toshin area is occupied by luxury retailers such as Louis Vuitton, Chanel, Piaget and Burberry. – CNA/ir

Source : Channel NewsAsia – 16 Jun 2008