EH-Reit stapled securityholders unlikely to see compensation from sales proceeds: trustee

Janice Heng
Published Thu, Jul 15, 2021 · 06:53 PM

SALES proceeds from the sale of Eagle Hospitality Trust (EHT) properties are unlikely to reach minority investors, DBS Trustee said in a release on Thursday.

It had worked with the Securities Investors Association (Singapore) to produce a video presentation to update Eagle Hospitality Real Estate Investment Trust (EH-Reit) stapled securityholders and address their questions.

Though the sale of 14 of EHT's properties yielded US$478.6 million in net proceeds, it is unlikely that the claims of all unsecured creditors will be satisfied in full, after accounted for various secured claims, said DBS Trustee, adding: "The sale proceeds are therefore not expected to result in a recovery for stapled securityholders."

EHT is a stapled group comprising EH-Reit and the dormant Eagle Hospitality Business Trust.

Responding to a question about whether it was also a creditor to EHT, which filed for Chapter 11 bankruptcy in January, DBS Trustee clarified that aside from any accrued but unpaid trustee fees, it is not a creditor of EHT.

It added that while DBS Bank is a lender in the US$341 million syndicated loan granted to EH-Reit, that does not concern DBS Trustee, which is a separate legal entity and acts separately from DBS Bank.

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Stapled securityholders also asked about due diligence done on EHT's sponsor, Urban Commons, at the time of its initial public offering (IPO).

"It is clear that that the post-IPO issues facing EHT are the result of, amongst other things, multiple delinquencies on the part of the previous master lessees with regard to the master lease agreements for all 18 properties in EHT's portfolio," replied DBS Trustee.

It said it was not in a position to speculate on whether these delinquencies could have been avoided by pre-IPO processes, and noted that it was not directly involved in the due diligence process for the IPO.

READ MORE:

  • EHT unit gets court nod to reject Queen Mary floating hotel's lease and operational agreements
  • EHT unitholders file lawsuit against manager's board, claiming shortfalls in disclosure
  • EH-Reit books US$324.7m in net proceeds from sale of non-auctioned assets

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