Lujiazui property dispute moves to appeals court

Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. (Lujiazui) has disclosed that a significant litigation case involving its controlled subsidiary, Shanghai Dongmao Real Estate Co., Ltd. (Dongmao Company), has progressed. Both Dongmao Company and Shanghai Depp Cultural Development Co., Ltd. (Depp Culture) have filed appeals following a first-instance judgment from the Pudong New Area People's Court of Shanghai, issued in April 2025. Dongmao Company seeks to overturn parts of the ruling requiring it to pay compensation for renovation costs, while Depp Culture is appealing aspects related to rent, occupancy fees, and breach of contract penalties.

The first-instance judgment ordered Depp Culture to vacate the property and pay Dongmao Company approximately RMB 15.7m in rent and occupancy fees, while Dongmao Company was ordered to pay Depp Culture RMB 36m in renovation and improvement compensation. Dongmao Company's appeal seeks to increase rent and late payment fees to approximately RMB 12.57m and RMB 2.64m, respectively, and overdue occupancy fees to RMB 47.83m. Conversely, Depp Culture’s appeal requests a reduction in its rental payment obligation to RMB 2.39m and seeks approximately RMB 259.24m in damages, including renovation and loss of profit.

Lujiazui has provisioned for a contingent liability based on the initial judgment but notes the uncertainty of the final outcome given the ongoing appeal. The company highlights that its controlling shareholder, Lujiazui Group, has guaranteed to fully compensate Dongmao Company for any economic losses incurred due to pre-acquisition issues, meaning Dongmao Company’s portion will be recorded as capital reserve.