The manager of EC World REIT says its sponsor, Forchn Holdings, has provided it with a real estate mortgage de-registration certificate issued by the Hangzhou Bureau of Planning and Natural Resources. The certificate, dated Jan 16, states that the illegal mortgage imposed over the REIT’s Hengde Logistics property has been discharged.
The manager has confirmed the news after issuing a separate request to its onshore security agent to ensure that the information it had received was accurate.
Forchn has also informed the manager that it is working on solutions to discharge the remaining two illegal mortgages imposed over Fuzhou E-Commerce and Fuheng Warehouse.
EC World REIT, on Jan 2, announced that “certain third ranking mortgages” had been imposed on its properties, Fuzhou E-Commerce, Fu Heng Warehouse and Hengde Logistics. The mortgages were imposed without the consent or knowledge of the REIT’s manager. The manager came to learn of the mortgages on Dec 29, 2023.
The mortgages were understood to have been created in favour of two entities, Hangzhou Fuyang Futoufa Zhenfu Equity Investment LLP and Zhejiang Fuyue Finance Lease Co., Ltd. between Nov 20 and 24 in 2023. Both entities are linked to the Fuyang government in China. The mortgages were said to be made in connection with the Fuyang government providing Forchn with certain rescue funds of about RMB268.8 million ($51.3 million) based on preliminary inquiries.
“For the avoidance of doubt, the rescue funds were provided to the sponsor pursuant to various arrangements between the Fuyang Government and the sponsor group; EC World REIT is not privy to, and did not consent to, such arrangements,” said the REIT manager on Jan 2.
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On Jan 15, the REIT manager said that Forchn had provided a list of assets, which included the three properties, to the Fuyang financial institutions in connection to the provision of certain rescue funds to Forchn from the two entitles linked to the Fuyang government.
The relief funds from the Fuyang financial institutions amounted to around RMB120 million and RMB100 million.
The Fuyang Financial Institutions then requested the third, fourth and fifth ranking mortgages to be imposed on the properties for a value of RMB268.6 million as well as other mortgages and, or securities imposed on the sponsor’s other properties and other assets that are not related to EC World REIT.
Units in EC World REIT last traded at 28 cents.
