According to the prospectus, each EHT subsidiary receives rental payment for each property from the relevant (Urban Commons) master lessee comprising a fixed rent and variable rent. “Each of the Master Lease Agreements has an initial term of 20 years from the Listing Date with an option exercisable by the relevant Master Lessee to obtain an additional lease for a further 14 years for all Properties located in California and 20 years for all oth-er Properties located elsewhere,” the pro-spectus states.
SINGAPORE (July 10): Eagle Hospitality Trust formed a series of subsidiaries to hold its 18 properties which are referred to as master lessors. Its sponsor Urban Commons also formed 18 subsidiary companies some of which are Cayman registered to act as master lessees.
The 20 year master leases for the 18 properties in EHT’s portfolio helped to boost and bloat its IPO valuation, to the detriment of its investors.
