AllCo – SGX

CLAIM BY (1) GUY CARPENTER & COMPANY PRIVATE LIMITED, (2) WILLIAM M. MERCER (S) PTE LTD, AND (3) MERCER OLIVER WYMAN PTE LTD

The Board of Directors of Allco (Singapore) Limited (the “Manager”) wishes to announce that Allco (Singapore) Limited, in its capacity as the manager of Allco Commercial Real Estate Investment Trust (“Allco REIT”) (SGX:ALLC), together with British and Malayan Trustees Limited, in its capacity as trustee of Allco REIT (the “Trustee”) and Unicorn Square Limited, have, on 5 September 2007, been served with a Writ and an Indorsement of Claim (collectively, the “Writ”) by Guy Carpenter & Company Private Limited, William M. Mercer (S) Pte Ltd and Mercer Oliver Wyman Pte Ltd (collectively, the “Claimants”). Unicorn Square Limited is the master tenant of the China Square Central Property (being the premises located at 18, 20 and 22 Cross Street, Singapore) owned by Allco REIT.

The Claimants were tenants in a 15-storey office and retail development known as Marsh & McLennan Centre at 18 Cross Street, which comprises a part of the China Square Central Property. Their respective leases expired on 30 June 2007. In the Indorsement of Claim, the Claimants have claimed that they are entitled to a renewal of their leases from 1 July 2007 to 30 June 2012, based on the terms of the leases which have expired, and/or damages. The Manager has been informed that the Claimants will file a Statement of Claim in due course.

The Manager intends to defend the claims made by the Claimants vigorously, and also to instruct the Trustee to do so. The Manager has taken legal advice and is of the opinion that the claims are without merit. The leases were not renewed as a result of the Claimants’ failure to properly exercise the options to renew. Notwithstanding the expiry of their leases, the Claimants have remained in occupation of the premises, and it has been made clear to them that the continued occupation (pending the determination of the issues by the court), is on the basis that they are holding over and therefore liable for double rental. In the meantime, monthly rental payments received from the Claimants have been accepted on the basis that they are payments on account for the double rent payable in the period of occupation from 1 July 2007 onwards.

In the event that the Claimants succeed in their claims, they will be entitled to a renewal of the leases on substantially the same terms as the earlier leases. The Manager’s position is that the Claimants, having remained in occupation throughout, would not have suffered any damage.

In the event that the Claimants fail in their claims, but desire to remain in the premises, they will be required to enter into fresh leases on terms to be agreed. They will also be liable to pay double rental for the period of holding over. In either case, rental is and will continue to be payable to the Trustee under the terms of the master lease between the Trustee and Unicorn Square Limited, and thus the income of Allco REIT derived from the China Square Central Property will not be affected by the proceedings commenced by the Claimants.

Further announcements will be made by the Manager as and when appropriate.

Source : SGX