THE manager of EC World Real Estate Investment Trust (Reit) said the group is initiating legal action to push for the discharge of illegal mortgages.

It noted that the illegal mortgages imposed over Fuzhou E-Commerce and Fuheng Warehouse have not been discharged as of Thursday (Feb 1), as the sponsor Forchn is still exploring various options.

Since the mortgages were not removed by the deadline of Wednesday, the EC World Reit group is in the process of launching legal action against Hangzhou Fuyang Futoufa Zhenfu Equity Investment and Zhejiang Fuyue Finance Lease Co – the two entities linked to the Fuyang government involved in the mortgages – as well as Forchn in China for the discharge of the illegal mortgages.

The manager said this design was made after discussions with the lenders and DBS Trustee. It added that the board is also evaluating various options for the Reit.

The Reit’s lenders had previously given the sponsor until Wednesday to remove the remaining two illegal mortgages. The mortgage over Hengde Logistics, one of the three illegal mortgages, was discharged by the Chinese government, based on the manager’s announcement on Jan 18.

All three illegal mortgages were imposed between Nov 20 and Nov 24, 2023, in favour of the 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 manager had on Jan 24 explained the process lapses leading to the illegal mortgages, in which the property manager in China bypassed the internal process to lend relevant seals to the sponsor for the mortgage applications.