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Singapore Law Watch
28-05-2025
- Business
- Singapore Law Watch
Judge okays bulk of $32.1m claim by Ascendas against defunct Park Hotel Clarke Quay operator
Judge okays bulk of $32.1m claim by Ascendas against defunct Park Hotel Clarke Quay operator Source: Straits Times Article Date: 28 May 2025 Author: Grace Leong The hotel was renamed Riverside Hotel Robertson Quay after CapitaLand unit AIMPL took over from August 2021 to September 2022. Ascendas Hospitality Reit (AH-Reit), the landlord of the former Park Hotel Clarke Quay property in Unity Street, was allowed to claim the bulk of a $32.1 million sum for unpaid rent and other charges against the defunct former operator Park Hotel CQ (PHCQ) under a High Court ruling on May 23. High Court Justice Audrey Lim reduced AH-Reit's proof of debt to $31.1 million, after excluding $273,792 in property tax from Oct 1, 2022, to June 27, 2023, and costs totalling $679,454. PHCQ was wound up by the High Court on Nov 19, 2021. This came after AH-Reit terminated its master lease with PHCQ on Aug 28, 2021, and took possession of the property after the hotel operator failed to pay $5.92 million in debt. The hotel was then renamed Riverside Hotel Robertson Quay after CapitaLand unit Ascott International Management (AIMPL) took over from August 2021 to September 2022. It was subsequently rebranded as The Robertson House by The Crest Collection, which opened in October 2023. The $32.1 million claim comprises unpaid rent by PHCQ, charges payable during the handover of the property, property tax and other costs. About $25 million of the claim was disputed by another PHCQ creditor, Park Hotel Group Management (PHGM). PHGM is owned by British Virgin Islands-incorporated Good Movement Holdings which is, in turn, owned by Mr Allen Law Ching Hung, the son of Hong Kong-based billionaire Law Kar Po. Mr Allen Law was also the sole director and chief executive of PHCQ from April 3, 2013, until March 16, 2021, when he stepped down. The $32.1 million claim includes a claim for net rent of $20.4 million for the remainder of the lease from Aug 28, 2021, to June 27, 2023. This comprises $27.2 million of rent, minus $8.2 million plus GST, the income earned by AH-Reit during that period to reduce its rental losses from PHCQ's early termination. PHGM argued that the liquidators had accepted the $8.2 million earned income figure without properly considering if AH-Reit had taken adequate measures to reduce its rental losses and whether it was reasonable to allow AIMPL, an entity related to AH-Reit, to operate the property from Aug 28, 2021, to Sept 29, 2022. PHGM added that, instead of leasing the property to an independent third party, AH-Reit had subsequently entered into a related-party transaction with Ascott Hospitality Business Trust (AHBT) from Oct 1, 2022 onwards, with AIMPL continuing to manage the property. But Justice Lim ruled that she did not find the arrangement 'unreasonable', and said the liquidators of PHCQ had 'properly' accepted AH-Reit's claim pertaining to $20.4 million in unpaid rent. Furthermore, she agreed with the liquidators that it was speculative to assume that AH-Reit could have found another tenant willing to pay a higher rent. 'The property was essentially a hotel and the remaining duration of the lease, had it not been terminated, was short. At the time, Singapore was also just emerging from the Covid-19 pandemic,' said Justice Lim. It is unclear how AH-Reit would have been able to find another tenant that would have been willing to take over the property's lease and run the hotel, she added. Although the judge ruled it was reasonable for AH-Reit to lease the property to AHBT from Oct 1, 2022, onwards, she reduced the claims for property tax incurred by AH-Reit for the period from Oct 1, 2022, to June 27, 2023. 'Neither AH-Reit nor the liquidators have explained why AH-Reit did not impose the obligation to pay property tax on AHBT under the AHBT lease, nor why the tax was borne by AH-Reit,' she noted. 'That the AHBT lease did not include an obligation on AHBT to bear the property tax is to be contrasted with the lease wherein PHCQ bore such an obligation,' she said. 'AH-Reit appears to have treated AHBT more favourably (compared with PHCQ) by not imposing an obligation on AHBT to pay property tax, only to then claim the property tax from PHCQ instead.' She pointed out that the liquidators' acceptance of AH-Reit's property tax claim, made seemingly without any scrutiny, was unsatisfactory. However, Justice Lim allowed the claim for $2.4 million in charges payable for the handover of the property from July 1, 2021, to Aug 27, 2021. PHGM had disputed the claim, saying there was no explanation for why the handover of the property by PHCQ to AH-Reit took nearly two months when it could have been done in a day, and why the lease was terminated on Aug 28, 2021. The liquidators argued that 'to ensure a proper handover, sufficient time was needed for AH-Reit to get information on the hotel operations and for PHCQ to prepare the asset listing and liaise with various parties on the novation or termination of its existing contracts'. PHCQ also had an agreement with the Singapore Land Authority during the pandemic to operate the property as a government quarantine facility (GQF) until Aug 27, 2021. Hence, it was not unreasonable for AH-Reit to defer the property handover until it had obtained the licences or approvals to operate the property as a GQF if this would enable the property to generate a steady stream of income and reduce the amounts payable by PHCQ, the judge ruled. Furthermore, PHCQ and AIMPL had to work with the National Trades Union Congress to ensure a smooth handover of employees. 'I am satisfied that the two-month handover period was not objectionable,' the judge ruled. Source: The Business Times © SPH Media Limited. 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Singapore Law Watch
21-05-2025
- Business
- Singapore Law Watch
Singapore construction sector sees fallout from US tariffs amid trade war truce
Singapore construction sector sees fallout from US tariffs amid trade war truce Source: Straits Times Article Date: 21 May 2025 Author: Grace Leong Firms feeling strain from uncertainty over pricing and supply of raw materials. Singapore's construction sector is starting to see some fallout from US President Donald Trump's global tariffs, with firms here grappling with uncertainty over pricing and supply of raw materials, according to local industry associations. But analysts are mixed on the tariffs' impact on construction materials costs in Singapore, even as the temporary truce reduces the risks of acute global supply chain disruptions. 'New US tariffs on steel and aluminium are tightening global supply chains, and Singapore is starting to feel the strain,' said Mr Benjamin Lim, Singapore Manufacturing Federation's (SMF) industry group chairman for building products and construction materials. 'Mills in China and India are fully booked for the next six to seven months as US buyers stockpile materials, limiting availability in Asia, and driving up costs.' On May 12, the US and China agreed to suspend part of their tariffs on their respective exports for 90 days. This was the latest development in what has become a tit-for-tat exchange between the two superpowers over trade since the US leader announced sweeping global tariffs on April 2. Despite the 90-day truce, analysts pointed out that the 25 per cent sector-specific tariffs on steel, aluminium, automobiles and auto parts announced in March and April remain in place, albeit with rebates for vehicles assembled in the US and a partial exemption for the UK. The 10 per cent universal tariffs announced on 'Liberation Day' are also still in place. Tariff uncertainty has wreaked havoc on aluminium prices, which jumped from US$2,449.90 per tonne in September 2024 to a peak of US$2,658.30 per tonne in March 2025, before dropping to US$2,371.60 per tonne in April. 'This swing in aluminium prices over a few months is causing uncertainty in budgeting and procurement,' Mr Lim said, adding that some building materials manufacturers here have seen higher aluminium costs and longer lead times. This refers to the number of days or weeks from the time orders for parts or materials are placed until the finished product is ready for delivery. 'For major projects, a 5 to 10 per cent increase in material costs could add millions of dollars in costs to budgets. Delays in delivery and unpredictable pricing are also disrupting timelines. Materials like facades and fittings, which rely heavily on aluminium, are especially affected,' he added. 'While April's aluminium price dip offers short-term relief, global trade uncertainty suggests continued turbulence ahead,' he warned. Mr Lim noted that the local construction industry has not been too badly hit by the tariffs on steel so far. 'However, if global steel prices increase due to redirected demand and tighter supply, we may start to feel the effects over the next three to six months,' he said. Singapore Contractors Association (Scal) president Lee Kay Chai noted that sector-specific tariffs on steel and aluminium have the potential to raise costs for Singapore's construction sector. But the 90-day truce may provide a 'temporary window of stability' in global pricing, even though volatility remains a concern over the long term, he said. 'The actual cost impact in Singapore will still depend on how long-term supply arrangements and market sentiment adjust,' he said. 'The construction ecosystem remains vulnerable to any re-escalation of trade tensions, and contractors must remain vigilant about project timelines and materials availability in the second half of 2025.' Although the risk of acute global supply chain disruptions is reduced for now, short-term supply re-directions are possible as Chinese exporters seek to re-route goods to markets in the region, such as Asean, said Mr Lee. Experts say Chinese exporters are doing so for two reasons: to tap burgeoning construction demand in the region, and also because their goods could gain access to US markets at lower tariff rates if the final processing was done at a third-party country such as Indonesia before being exported to the US. Meanwhile, some experts believe that the tariffs could benefit the construction sector in the Asia-Pacific as raw materials may get cheaper in the near term. Dr Dominic Brown, Cushman & Wakefield's head of international research, noted that the tariffs on steel and aluminium – and potential retaliatory action from the European Union – are expected to push up construction costs in the US and the EU, and slow the construction pipeline. In the short term, this may lead to excess product in the market. 'The Asia-Pacific, which currently has fewer tariffs in place and a significant construction pipeline of over 230 million sq ft of office space, is a likely destination for this surplus. This could lead to short-term price deflation in raw materials here,' Dr Brown said. But he pointed out that raw material costs are only one component of overall development costs. So even though the Asia-Pacific may benefit from lower raw material input costs in the near term, rising shipping fees, local labour and land costs continue to influence project viability, he added. Source: The Straits Times © SPH Media Limited. Permission required for reproduction. 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