TROUBLES seem to keep coming for EC World Reit. : BWCU 0%

The embattled real estate investment trust said on Tuesday (Oct 31) that one of its major tenants, China Tobacco, would not be renewing one of its two leases at Hengde Logistics, a warehouse property in EC World Reit’s portfolio.

The manager of the Reit said via a bourse filing that the company has decided to discontinue the lease, despite active negotiations with China Tobacco.

The lease, which started on Oct 5, 2020 and was to end on Dec 31, 2023, was for almost 160,000 square metres of space in Hengde Logistics.

China Tobacco has another lease contract, which began on May 9, 2021 and would also end on Dec 31, 2023, for 74,000 sq m in the same property.

The manager said that it is now in talks with China Tobacco to renew this lease. It will also conduct a review and look into a new leasing strategy for the space to be vacated.

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The loss of a major tenant follows EC World Reit’s announcement just last week that it had 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 of Oct 31.

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 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.

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