EC World Reit appoints new property managers, port operator
The contract terms for the appointments are for one year
[SINGAPORE] The manager of EC World Real Estate Investment Trust (EC World Reit) announced on Monday (Mar 17) the appointment of new property managers and a port operator for the Reit’s assets.
This follows a tender it launched in 2024 to select a new property manager for the Reit’s assets due to the expiry of property management agreements for two of its assets, Fuzhou E-Commerce and Wuhan Meiluote, and “concerns over existing checks and internal controls” surrounding the former property manager of the Reit’s properties, Yuntong Property Management. The concerns relate to lapses that led to unauthorised mortgages of three of the Reit’s properties.
Previous property management agreements with Yuntong that were originally set to expire on Jun 29, 2026, were terminated earlier by mutual agreement of the parties on Dec 31, 2024, the manager said.
The tender did not cover property management services for the Reit’s port assets due to the specific operating requirements of such assets, and the operator engaged to provide property management services for them should also serve as port operator, in the interest of efficiency, said the manager.
Following the tender, it entered into a property management agreement with Hangzhou Wangcheng Property Service, which was appointed as the property manager for the Reit’s assets – Fuzhou E-Commerce, Fuheng Warehouse, Hengde Logistics, Wuhan Meiluote and Beigang Logistics Stage 1.
Separately, it entered into a new port management agreement to appoint Hangzhou Chonghang Port Supply Chain as the port operator of its port assets Chongxian Port Investment and Chongxian Port Logistics, replacing the previous operator Hangzhou Fu Gang Supply Chain.
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It also entered into a new property management agreement to appoint Hangzhou Chonghang Port Property Management – a wholly owned subsidiary of the newly appointed port operator – to provide property management services for its port assets.
The contract terms for the new appointments are for one year from Jan 1, 2025, to Dec 31, 2025, so as to retain flexibility to terminate the relevant service provider at a minimum cost, in view of the Reit’s ongoing asset divestment exercise, the manager said.
In a bourse filing dated Jun 11, 2024, the Reit’s manager said that the lenders under an offshore facility agreement the Reit had entered into in May 2023 had demanded the sale and divestment of assets in order to repay liabilities by May 31, 2025.
Trading of the Reit’s units have been suspended since Aug 31, 2023, when the manager disclosed that ECW Group, comprising the Reit and its subsidiaries, could not fully repay its offshore interest expenses.
In a cautionary statement to unitholders, the manager stressed that there was “no certainty or assurance” that any discussion or prospects would be concluded, or any definitive agreements related to any transactions would be entered into.
It added that unitholders should exercise caution while dealing with the units and consult their stockbrokers, bank managers, solicitors or other professional advisers if they have doubts about the actions that they should take.
Illegal mortgages of three properties
In a September 2024 bourse filing, the Reit’s manager said that the chief executive officer of the Reit’s sponsor Forchn, which Yuntong is a subsidiary of, bypassed internal approval processes to mortgage three of the Reit’s properties without the manager’s consent or knowledge.
The properties, Fuzhou E-Commerce, Fuheng Warehouse and Hengde Logistics, were mortgaged in November 2023 in favour of two Fuyang government-linked entities in China.
The loans from the mortgage were “rescue funds” amounting to about 268.6 million yuan (S$49.8 million). They were provided to Forchn as per an arrangement between the Reit sponsor and the Fuyang government.
The CEO of Forchn denied that his actions were intentional and said that he mistakenly believed the Reit sponsor was allowed to mortgage the properties.
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