The Monetary Authority of Singapore is directing the trustee of Eagle Hospitality Real Estate Investment Trust to remove the REIT’s manager and to appoint a new manager.
This is in view of numerous breaches of the Securities and Futures Act by Eagle Hospitality REIT Management, manager of the scandal-fraught REIT since its IPO last May, and serious concerns over its ability to comply with rules and regulations.
See also: MAS and CAD arrest current and former directors and officers of EHT's managers
MAS is making this directive via a so-called Notice of Intention. DBS Trustee, the trustee, and the REIT manager have up to ten days to respond – if they want – if MAS should not proceed with this intention. If no representations are received, MAS will proceed on the basis that there are no comments.
According to the MAS, EH-REIT Mgt has committed multiple breaches of the SFA, including breaches of the minimum base capital and financial resources requirements.
“EH-REIT Mgt breached these financial requirements for the first time in the fourth quarter of 2019 but only informed MAS of these breaches in April 2020,” says MAS.
“Notwithstanding MAS’ direction in April 2020 to rectify the breaches and to take steps to enhance the monitoring of its financials, EH-REIT Mgt breached the same base capital requirement for a second and third time on 31 August 2020 and 30 September 2020 respectively,” adds MAS.
Other breaches by EH-REIT Mgt include, failure to seek MAS’ approval for its provision of financial assistance to a subsidiary; late submissions of regulatory returns; and failure to present to unitholders audited financial statements of EH-REIT within the stipulated timeframe.
“MAS has serious concerns about EH-REIT Mgt’s ability and commitment to comply with MAS’ rules and regulations. MAS therefore deems it necessary to direct DBS Trustee to remove EH-REIT Mgt from managing EH-REIT and appoint a new manager,” says the central bank cum financial industry regulator in a statement.
Trading of mainboard-listed EHT has been suspended since March this year after it defaulted on a US$341 million loan.
Howard Wu and Taylor Woods, the two individuals behind EHT’s sponsor, Urban Commons, have left the board.
In June, MAS has commenced investigations on EHT in conjunction with the Commercial Affairs Department and directors of the board and management of the REIT have been interviewed.
