Eagle Hospitality Trust's Dallas hotel to be sold to at lower price to buyer that made earlier, aborted offer

EMBATTLED Eagle Hospitality Trust (EHT) is set to sell one of the last three hotels in its portfolio for a lower price, after an earlier attempt was aborted in May.

Crowne Plaza Dallas Near Galleria-Addison (CPDG) will be sold to original buyer Lockwood Development Partners for US$15.5 million, Eagle Hospitality Real Estate Investment Trust (EH-Reit) trustee DBS Trustee announced on Friday.

The seller-owner and buyer resumed negotiations after an US$18.5 million deal fell through, with Lockwood Development Partners then submitting the revised offer.

The company that will acquire CPDG counts Frank Yuan and Jerome Yuan among its investors, according to the bourse filing. Mr Frank Yuan and his related parties had originally indirectly owned CPDG.

They later sold the freehold 428-room hotel to affiliates of EHT's original sponsor Urban Commons, who ultimately sold it to EH-Reit.

Still, the sale and purchase agreement for CPDG provides for warranties that neither the buyer nor any of its affiliates is tied to sponsor entities, the trustee added.

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The sale will close on Aug 27, unless seller and buyer agree in writing on a fresh date.

The latest move comes as EH-Reit - which is part of EHT - and other entities that had earlier filed for Chapter 11 bankruptcy in the United States found that the revised offer was the best for CPDG. The four competing bids that had been submitted to broker CBRE were described as either lower in value or "not viable", with a longer closing date.

The independent director of the seller-owner's parent also believed the revised bid "the most attractive combination of price and timing for any proposed sale of CPDG", with a fast execution dubbed "critical" amid debt issues and capital needs, the trustee said.

The sale value, which is to be satisfied in cash, comprises an initial deposit of US$100,000 by July 23; an additional deposit of US$900,000 by July 27; and the rest by one business day before the closing date of Aug 27.

EH-Reit's wholly-owned subsidiary had previously also held on to initial deposits of US$1.45 million from the earlier, unsuccessful transaction.

Sale proceeds are expected to repay sale-related expenses, the net outstanding amount on CPDG's mortgage loan, and unsecured claims against the seller-owner.

Any net proceeds will be distributed to the Chapter 11 entities, and will become part of the assets subject to the Chapter 11 process.

However, the sale of CPDG must first be approved by the US Bankruptcy Court.

The Reit trustee said that it will update stapled securityholders on any material developments "as and when appropriate".

Trading in EHT stapled securities has been suspended since March 2020.

READ MORE:

• Sale of Eagle Hospitality Trust's Dallas hotel falls through after buyer misses deposit deadline
• Eagle Hospitality Trust units get court nod to investigate Urban Commons founders