IReit Global’s German subsidiaries served with payment order by former tenant

The dispute stems from a dilapidation cost agreement made with the former main tenant of its Berlin Campus

Subsidiaries of IReit Global have been served with a payment order filed by Deutsche Rentenversicherung Bund (DRV), the former main tenant of its Berlin Campus, in a move that escalates a potential legal dispute into a formal court proceeding.

In a bourse filing on Thursday (Sep 11) evening, the real estate investment trust’s manager confirmed the payment order had been served on Wednesday.

The dispute stems from a lump-sum payment of 15.5 million euros (S$23.2 million) that DRV had agreed to pay for dilapidation costs to reinstate the Berlin property to its original state.

However, DRV is now seeking a partial repayment of 8.4 million euros, arguing in a legal letter sent on Jun 12 that the costs were “unjustified” because the underlying lease provision is legally invalid.

IReit’s manager said it intends to contest the action, maintaining that its subsidiaries have a “high chance of successfully defending against the asserted claim”.

The subsidiaries have until Oct 10 to file an objection to the payment order. If an objection is filed on time, the case will be referred to the district court of Berlin, where formal legal proceedings will be initiated.

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Units of IReit closed flat at S$0.29 on Thursday, before the announcement.