Eagle Hospitality Reit to dispose of hotel for US$18m

A WHOLLY-OWNED subsidiary of Eagle Hospitality Real Estate Investment Trust (EH-REIT) entered into a sale-and-purchase agreement on April 7 for the sale of one of the 18 hotels in Eagle Hospitality Trust's (EHT) portfolio, DBS Trustee said on Monday.

In an exchange filing, DBS Trustee, in its capacity as trustee of EH-REIT, said that the subsidiary entered into the agreement with Lockwood Development Partners for the sale of Crowne Plaza Dallas Near Galleria-Addison (CPDG) property in Texas for US$18 million.

The property is a freehold property comprising a four-storey, 428-room hotel located near downtown Dallas and Dallas Fort-Worth International Airport.

DBS Trustee said that CPDG is one of three properties in EHT's portfolio that is not directly owned by a Chapter 11 entity, so it is not subject to bankruptcy protection under Section 363 of the United States Bankruptcy Code.

DBS Trustee said it had been advised that CPDG had retained sufficient value to warrant an effort to sell the hotel. It noted that the hotel has remained closed since April 2020, but incurs ongoing expenses of approximately US$100,000 per month, which continue to accrue.

The trustee also noted that there was a risk of CPDG's lender exercising its right to foreclose on the property. "In that event, CPDG will unlikely generate any net proceeds for such a sale and this would not be in the interests of stakeholders."

The proceeds of the CPDG disposal will be used to repay disposal-related expenses (including professional fees), the net outstanding amount under the CPDG mortgage loan, and other unsecured claims against the seller-owner, including outstanding accounts payable, DBS Trustee said.

It added: "If and to the extent there are net proceeds after making such repayments, such remaining net proceeds will be distributed upstream to the Chapter 11 Entities, as the holding company of the seller-owner is a Chapter 11 Entity, and will form part of the pool of assets which will be subject to the Chapter 11 process."