EHT unit surrenders Queen Mary floating hotel property to California city

URBAN Commons Queensway (UCQ), a unit of embattled Eagle Hospitality Trust (EHT), has surrendered the Queen Mary property - a former ocean vessel-turned-floating hotel - to the City of Long Beach, California, on June 4.

The entities of Eagle Hospitality Trust (EHT) under Chapter 11 protection have also filed a motion with the US Bankruptcy Court to reject lease and operational agreements for the Queen Mary property, which is currently closed, DBS Trustee announced in a Tuesday bourse filing.

This includes the long-term ground lease agreements between the City of Long Beach and UCQ. The hearing on the motion is expected to be on July 7. If granted, UCQ would no longer hold the leasehold interest in the Queen Mary property.

The EHT entities decided to file the motion due to a lack of viable prospects of selling off the interest in the Queen Mary property in an auction, DBS Trustee said.

One challenge in finding a buyer would be the substantial cure costs which a buyer will have to pay, and the substantial capital improvements required by the Queen Mary property, it added.

The property's expenses include about US$45,000 per month in rent to the City of Long Beach, US$300,000 per month in caretaker costs, US$1.3 million for the hull and property insurance premium due in July and US$150,000 of audit expenses also due in July.

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"There is also no viable prospect of re-opening in the foreseeable future as it would require significant costs and expenses to do so," the trustee added.

EHT had filed for Chapter 11 bankruptcy in January this year. In late May, five of its properties put up for auction received qualified bids.