SINGAPORE (May 20): Eagle Hospitality Trust’s (EHT) non-executive chairman Howard Wu and deputy chairman Taylor Woods are set to resign from the Board of Directors, the REIT announced on Wednesday.
Both Wu and Woods, who also double-up as co-founders and principals of the REIT’s sponsor Urban Commons, are set to resign with effect from May 26.
The resignations follow the discovery of interested party transactions that were inked by the duo on behalf of trust’s master-lessor subsidiaries. The transactions in question were uncovered during an ongoing strategic review of EHT’s business.
The agreements were also noted to be “not on usual commercial terms” and were therefore “prejudicial” to the interests of EHT and its minority stapled securityholders.
Under the terms of the agreement, the master lessors of six properties owned by EHT had reportedly agreed to guarantee the payment and performance of the respective master lessees. They had also agreed to assume the obligations and liabilities of the lessee in the event of the termination of these agreements, even if the obligations were accrued prior to the date of termination.
EHT and DBS Trustee had claimed they were unaware of “any negotiations of nor the execution of” the six Further Non-Disturbance Agreements that were signed until they were informed by their United States legal counsel.
“Nor were copies of these further non-disturbance agreements provided to the board prior to their execution by the relevant master lessors,” noted EHT.
On May 16, SGX Regulation (SGX RegCo) had asked the REIT’s nominating committee to justify if and why Wu and Woods are still considered suitable to serve on the board of the manager.
“Despite requirements to do so pursuant to EHT’s interested-person transaction compliance manuals, the further non-disturbance agreements were not internally reported, disclosed and declared in accordance with compliance policies,” said SGX RegCo in its query to the REIT.
See: EHT says sponsors Wu and Woods made deals "prejudicial" to minority unitholders
In response to queries from The Edge Singapore, SGX RegCo said that it was unable to comment further on the matter, but said that it has been keeping tabs on EHT and has been taking necessary action.
"The Monetary Authority of Singapore (MAS) and SGX RegCo have commenced investigations into disclosures by EHT," said an SGX RegCo spokesperson.
"We have been closely monitoring EHT and taking action where necessary, as can be seen from recent developments," added the regulator.
At 8.41pm on Wednesday, EHT released a letter from Urban Commons, which said it did not intentionally hide or withhold anything from the EHT's board of managers or DBS Trustee in relation to the signing of the agreements.
Urban Commons also said that it had been in discussions for six months regarding potential partnerships with "Asia-based partners".
"This is an extremely sensitive time due to Covid-19, but more than anything we want to ensure the strength and stability of EHT," said Urban Commons.
"We aim to bring on board a new strategic partner at the Manager level to stabilize, strengthen and improve operations," said the group.
Urban Commons said that it would announce its new partner upon the completion of the approval and finalisation of partnership details.
Units in EHT last traded at 13.7 US cents prior to a voluntary trading suspension that took effect on Mar 24.
