EC World Real Estate Investment Trust (Reit) has failed to sell two logistics assets in Zhejiang, China, as the Reit sponsor could not obtain sufficient financing for the proposed divestment.

This rendered the sponsor Forchn Holdings and the purchasers unable to complete the deal by the already postponed long-stop date on Oct 31, the manager announced on Thursday (Oct 26).

The manager said it is looking for at least two independent consultants to evaluate the possibility of divesting one or more of the Reit’s properties to third parties via open market sale. This includes, but is not limited to, Bei Gang Logistics and Chongxian Port Logistics.

The troubled Reit is also seeking legal and financial advice on the possible termination of the proposed divestment and options to address “ongoing challenges”.

EC World Reit had on Sep 30 last year entered into an equity purchase agreement to divest all of its indirect interests in the two logistics assets in Zhejiang.

The long-stop date was extended to Oct 31 from the initial Jan 31 this year, after the Reit received approval from the Monetary Authority of Singapore.

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Its units have been suspended since Aug 31, following manager’s disclosure that the Reit and its subsidiaries could not fully repay their offshore interest expenses due.

The challenging financial position could have been resolved, the manager said, if the sponsor group had paid the “sufficient” amount of the 145.8 million yuan (S$27.4 million) overdue rent receivables on time. This is spread across ECW Group’s four master-leased properties in China, including Fu Heng Warehouse in Hangzhou.

On Sep 21, the manager announced that around 11.3 million yuan had been released from its onshore interest reserve to repay the Reit’s onshore interest expenses, which were due on the day before. The manager also extended the Reit’s trading suspension to resolve financial uncertainties.

Among its financing woes, ECW Group faces S$443.2 million in borrowings due on Jun 30, 2024. It also has existing offshore facilities ending on Apr 30 next year, which could be further extended to 2026.

However, any extension of the initial termination date is subject to its completion of the proposed divestment of the two China properties, noted the manager on Sep 21.