Sasseur REIT warns of potential litigation over Hefei Outlets’ construction

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Sasseur REIT’s manager said on Tuesday that its wholly owned subsidiary, Hefei Sasseur Commercial Management, or Sasseur Hefei, had received notice that Zhongjian Sanju No.2 Construction Engineering, or ZS2, had initiated an action against it in the Anhui Higher People’s Court in China for around 148.4 million yuan and its legal costs.

ZS2’s action against Saseur Hefei was over a disagreement between the REIT’s sponsor and ZS2 over the final construction sum payable for the Sasseur (Hefei) Outlets, which was completed in May 2016, it said in a filing to SGX after the market close on Tuesday.

In connection with the claim, ZS2 had sought and obtained court orders to freeze some of Sasseur Hefei’s bank accounts in China, but Sasseur Hefei successfully applied to the same courts to strike out those orders and lift the freeze, it said.

“The manager is of the view that there will not be any disruptions to the operations of Sasseur Hefei and Hefei Outlets,” the filing said.

Sasseur REIT’s manager said the sponsor alleges ZS2’s claim is baseless, but it is evaluating the claim with the sponsor and seeking legal advice. It said they intend to “vigorously defend” Sasseur Hefei against the claim.

The manager also noted that in the November 2017 sale agreement, the sponsor had irrevocably and unconditionally agreed to indemnify Sasseur REIT against any losses related to additional construction payables not provided for in the agreement. The agreement had already provided for 117.5 million yuan for construction accounts payables incurred by ZS2, it said.

The manager’s board said it expected the legal proceedings wouldn’t have a material impact on Sasseur REIT’s distribution per unit for the current financial year.

Shenton Wire was unable to find a contact for ZS2.

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