ONE of the three illegal mortgages imposed on EC World Real Estate Investment Trust’s (EC World Reit) Chinese properties has been discharged by the government’s land regulation arm.

This is based on a Real Estate Mortgage De-registration Certificate issued by the Hangzhou Bureau of Planning and Natural Resources, provided by the Reit’s sponsor Forchn Holdings Group, said the Reit manager on Thursday (Jan 18).

The discharged mortgage was over Hengde Logistics, one of six Hangzhou properties owned by EC World Reit.

The sponsor is said to be working on solutions to discharge the remaining two illegal mortgages on Fuzhou E-Commerce and Fu Heng Warehouse.

The manager, EC World Asset Management, said it has verified and confirmed the accuracy of the information with its onshore security agent.

All three illegal mortgages were imposed between Nov 20 and Nov 24 in 2023, in favour of two Fuyang government-linked entities in Hangzhou for loans of 268.6 million yuan (S$51.3 million) to the sponsor.

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The Reit manager said on Jan 2 that the sponsor had taken out the mortgages without its knowledge and consent. It only learnt about the illegal mortgages from its onshore security agent.

Since Jan 5, the manager has taken control of the company and legal representative seals, as well as the contract and finance stamps from the property management teams in China.

The sponsor updated unitholders on Jan 15 that a lapse in the approval process resulted in the illegality of the three mortgages.

Trading of EC World Reit : BWCU 0% units has been suspended since Aug 31, 2023, after the manager said that the Reit and its subsidiaries were unable to fully repay their offshore interest expenses due.