Starhill Global REIT clashes with Myer over alleged breach of lease

Myer occupies 52.0% of the net lettable area in the Myer Centre Adelaide.

Starhill Global REIT said it has received a notice of arbitration from one of its biggest occupiers at Myer Centre Adelaide, Myer.

Myer occupies 52.0% of the net lettable area in the Myer Centre Adelaide.

In a bourse filing, Starhill Global REIT said Myer is alleging that there has
been a breach of their lease which will end in June 2032.

Myer is also claiming unspecified damages and is seeking a declaration that they are entitled to terminate their lease.

“Under the Arbitration Claim, Myer alleges that the Landlord has breached, and is continuing to breach, the Myer Lease by maintaining the Myer Centre Adelaide in a condition whereby it is substantially empty of suitably presented retail stores,” the REIT’s manager said. 

Stahill’s manager said Myer’s arbitration claim is “ill-founded” and that the REIT will take “all steps necessary to vigorously defend the arbitration claim.” 

The REIT’s manager said  the arbitration process will likely take over 12 months, “unless the claim is resolved earlier through other means such as settlement.”

Since Myer has been paying rent under the lease, the REIT said the arbitration claim will likely have a material impact on its distributable income for the financial year ending 30 June 2023.

“Myer Centre Adelaide’s valuation of $239.3m accounted for approximately 8.3% of Starhill Global REIT’s total portfolio valuation as of 30 June 2022,” the manager said.

“The Myer Lease (annual revenue of approximately $13.7m) contributed approximately 7.4% and 9.0% of Starhill Global REIT’s total portfolio revenue and net property income, respectively, for the financial year ended 30 June 2022.” the manager added.