Eagle Hospitality Trust rejects sponsor's allegations of breaches

EAGLE Hospitality Trust (EHT) has rejected allegations by its sponsor, Urban Commons (UC), that EHT's subsidiaries are in breach of agreements in which UC entities are master lessees.

In a Singapore Exchange filing on Thursday, the Reit's managers called the allegations baseless, and said that the master lessors - EHT subsidiaries - have issued a response letter on Aug 25, refuting and/or rejecting all the allegations.

UC had issued a notice dated Aug 12, alleging that EHT units were in breach of master lease agreements.

The allegations include EHT's failure to pay over US$15.3 million in relation to certain contracts, obligations and assets; they also charged that EHT had failed to maintain hotels, to refund rents for a hotel that sustained hurricane damage, and had used security deposits wrongfully.

EHT's managers said: "The managers and the Reit trustee consider, upon the advice of professional advisers, the master lessees' notice of breaches to be misguided, and the above allegations of breach in the master lessees notice of breaches to be baseless."

Adding that "it is in the greater interests of stapled security holders to focus EHT's resources on meeting its business and economic challenges rather than on addressing baseless allegations", they said that they would not substantively or continually respond to such allegations publicly, but will do so in the appropriate forum if the need arises.

In Thursday's statement, EHT's managers said that where UC's master lessees alleged breaches in making payment, they "have wrongly presupposed that the master lessors owed an obligation to them to make such payment to begin with".

The master lessees have also "wrongly presupposed that they had not defaulted", and "have ignored the fact that the multitude of serious challenges faced by EHT are attributable largely to their defaults dating back to as early as mid-2019... in failing to discharge and amassing liabilities to third parties in respect of the portfolio of EHT's properties to the tune of over US$50.7 million", said the Reit managers.

They warned holders of EHT's stapled securities that there is no certainty or assurance that there will be any satisfactory resolution with UC.