The landlord of Ngee Ann City and its anchor tenant, department store Takashimaya, are currently in a dispute over rent and have taken the case to the High Court.
Takashimaya and Ngee Ann Development have been in a business partnership for over 22 years. In 1993, Takashimaya signed a lease with Ngee Ann Development for 20 years, which also give Takashimaya six options to subsequently renew for 10 years each. The lease also states that the rental rate is to be reviewed every five years and that if both parties cannot agree on the value, it will be determined by a valuer.
Hence in 2013, Ngee Ann Development proposed a revision to the rent. This would increase the rent from $8.78 per square foot per month to $19.83 per square foot per month.
With a more than double increase in the rent, Takashimaya rejected the report. As per the lease, the two parties then agreed to each consult one valuer to determine the rent by taking the average of the two valuations presented.
In this agreement, the two parties also stated that any correspondence to the valuers had to be copied to the other side.
However, this agreement was not followed by Ngee Ann Development, who had sent a letter to its valuer with instructions to use a hypothetical layout of the department store. This correspondence was not forwarded to Takashimaya’s side. In response, Ngee Ann Development stated that this was an “administrative oversight” on their part.
Takashimaya has also expressed that the rental value should take into account the existing configuration of the area, and not just the hypothetical configuration used by Ngee Ann Development and it’s valuer.
The High Court hearing involving the two parties began on Tuesday (29 March).