Shareholder of EH-Reit's manager files appeal to finance minister against removal

THE shareholder of Eagle Hospitality Reit Management (EHRM) - manager of Eagle Hospitality Real Estate Investment Trust (EH-Reit) - on Dec 10 filed an appeal to Finance Minister Heng Swee Keat, regarding the directive on its removal.

In a press statement on Thursday, Mandarin West Holdings (MWH), the sole shareholder of EHRM, noted that the directive from the Monetary Authority of Singapore (MAS) dated Nov 30 instructed the trustee of EH-Reit to remove EHRM within one month from the date of issuance of the directive, or such longer period that MAS may approve in writing, and appoint a new manager for EH-Reit.

"Upon taking professional advice, MWH's position is that there are meritorious grounds of appeal with reasonable chances of success," the shareholder said in the statement.

"Accordingly, the appeal against the MAS directive has been lodged with the Minister under the Securities and Futures Act (SFA)," it added. MWH said it has "stressed the fact that it has injected millions of dollars of additional cash into the Reit compared to the income generated by its properties over the same time period".

Last month, MAS ordered the removal of EHRM as the manager of EH-Reit. MAS also directed DBS Trustee, in its capacity as trustee of EH-Reit, to appoint a new manager "as soon as practicable". Following the directive, SCCPRE Hospitality Reit Management was identified earlier this month as the proposed new manager for EH-Reit.

MAS's directive follows a Notice of Intention (NOI) issued on Oct 26 on the removal, in view of "numerous" breaches of the SFA by EHRM, as well as "serious concerns" over the manager's ability to comply with rules and regulations.

MAS said it received written submissions from MWH in response to the NOI and had "carefully considered" these. However, as the written submissions raised "no new material facts", MAS proceeded to issue the directive to DBS Trustee.

"MAS continues to have serious concerns with EHRM's ability and commitment to comply with MAS's rules and regulations, given the numerous breaches of the SFA, including recurrent and ongoing breaches of capital and financial requirements," MAS said last month when ordering the removal.

The Business Times has reached out to MAS for comment on the latest appeal.

Trading in Eagle Hospitality Trust's stapled securities - comprising EH-Reit and Eagle Hospitality Business Trust - was voluntarily suspended on March 24 this year.