Eagle Hospitality Trust unlikely to have distributable income for the year; no Q3 payout to unit holders

EMBATTLED hospitality stapled group Eagle Hospitality Trust (EHT) will probably not have income available for distribution for the year to Dec 31, the manager has said.

Given factors such as the trust's loans and liquidity, as well as master lessees' inability to make rental payments, "it is highly unlikely that EHT will have distributable income for distribution in accordance with the distribution policy", according to third-quarter financial results released last Friday night.

The outlook statement added that "the prospects of a consensual restructuring of EHT remains (sic) uncertain", while the trust's portfolio of 18 hotels in the United States are at risk should EHT lenders take enforcement action.

The manager declared no distribution per stapled security for the three months to Sept 30, compared with the payout of 1.649 US cents for the same period the year before.

That comes as EHT had no income available for distribution in the period, against distributable income of US$14.4 million previously.

The stapled group sank into a loss of US$556.9 million, reversing the post-tax profit of US$12.6 million in the year-ago period.

Net property income fell by 29.4 year on year, to US$14.2 million, while revenue dropped by 22.9 per cent, to US$16.6 million.

The bottom line was torpedoed by US$534.2 million in net fair value change in investment properties, after independent valuations by Colliers as at Aug 31.

EHT also recorded US$48.1 million in impairment loss on trade and non-trade receivables - no thanks to the master lessee's inability to make rental payments - as well as US$9.05 million in net finance costs.

Besides the possibility that EHT properties may not be able to generate sufficient cash flow, the outlook statement also flagged that there cannot be any assurance as to EHT's operations as a going concern.

Meanwhile, the Monetary Authority of Singapore (MAS) last month issued a notice to remove the manager of Eagle Hospitality Reit (EH-Reit), which, along with the dormant Eagle Hospitality Business Trust, comprises the EHT stapled group.

The MAS directed DBS Trustee to remove the management, citing breaches of Securities and Futures Act requirements such as base capital and financial resources.

Singapore's financial regulator also said at the time that it had serious concerns about the management's ability and commitment to comply with its rules and regulations.

"The operations of EH-Reit will be adversely affected if no suitable replacement manager is found or can be found in a timely manner," the manager has now said in the latest financial statements.

Trading in EHT units was voluntarily suspended on March 24, after EH-Reit defaulted on a loan of US$341 million.