Axis REIT sues ex-tenant to recover RM105 mil in unexpired future rental payments

• The REIT said the suit against Yongnam Engineering Sdn Bhd (YESB) was filed by its trustee, RHB Trustees Bhd, at the High Court in Johor Bahru on Tuesday.

KUALA LUMPUR (Sept 5): Axis Real Estate Investment Trust (Axis REIT) is suing a former tenant at Axis Steel Centre @ SiLC in Nusajaya, Johor to recover unexpired future rental payments amounting to RM105.4 million.

The REIT said the suit against Yongnam Engineering Sdn Bhd (YESB) was filed by its trustee, RHB Trustees Bhd, at the High Court in Johor Bahru on Tuesday.

In a filing with Bursa Malaysia, Axis REIT said it had on May 8 terminated the lease agreement entered with YESB in November 2014 after YESB defaulted on rental payments.

In December last year, RHB Trustees commenced civil action against YESB and its corporate guarantor, Yongnam Holdings Ltd, over RM8.46 million in unpaid rental and other charges YESB owed as of Dec 21, 2022.

It also commenced distress action against YESB over unpaid rental in January and February 2023 amounting to RM2.35 million. The distress action was then carried out by the court on July 24, with the seized items in the property sold for RM1.2 million.

"This amount of RM1.2 million will be utilised to offset part of the total outstanding sums due and owing by the defendants to the trustee under the lease agreement in respect of outstanding rental due and owing for January and February 2023.

“Further to the termination notice and the completed distress action, the trustee intends to recover the outstanding rental payments from YESB including rentals for the unexpired period of the lease agreement of RM105.4 million,” said Axis REIT.

It added that its manager, Axis REIT Managers Bhd, is currently unable to estimate and assess the financial and operational impact of the lawsuit on the REIT as this depends on the outcome of the suit.

Shares in Axis REIT ended one sen or 0.55% lower at RM1.82 on Tuesday, giving the REIT a market capitalisation of RM3.17 billion.

Looking to buy a home? Sign up for EdgeProp START and get exclusive rewards and vouchers for ANY home purchase in Malaysia (primary or subsale)!