The Monetary Authority of Singapore has seen enough of the ongoing saga of Eagle Hospitality Trust, with the country’s central bank saying on Monday that it aims to remove the manager of the hotel REIT.
In an announcement on its website the Monetary Authority said that it has issued a Notice of Intention to the trustee of the listed trust to direct it to remove Eagle Hospitality REIT Management Pte Ltd and appoint a new manager following what it termed numerous breaches of the country’s Securities and Futures Act (SFA). The regulator also expressed skepticism regarding the manager’s ability to comply with rules and regulations.
“Since it was licensed in May 2019, EH-REIT Mgt has committed multiple breaches of the SFA, including breaches of the minimum base capital and financial resources requirements,” the Authority said in its statement, while also noting additional failures by the REIT manager to submit regulatory returns, seek necessary government approvals and present audited financial statements to unit-holders in the trust.
The Monetary Authority’s move this week came after six of Eagle Hospitality Trust’s current and former directors were arrested early this month on suspicions of violations of the Securities and Futures Act. The directors were later released on bail.
Breaches Started Within 7 Months of IPO
Eagle Hospitality Trust’s manager, along with DBS Trustee Ltd, which is the appointed trustee for the REIT, now have until the close of business on 9 November to respond with any written submissions regarding the regulator’s intentions.
Noting that it expects all financial institutions to have rigorous systems and processes to ensure compliance, the Monetary Authority cataloged multiple breaches of the Securities and Futures Act by Eagle Hospitality Trust’s manager since it was licensed in May 2019, which is the same month that the REIT debuted on the Singapore exchange.
The MAS indicated that the trust’s manager first breached requirements for minimum base capital and financial resources during the fourth quarter of 2019, but only informed the regulator of the failure in April of this year. The manager was said to breach those same requirements again in August and September of this year.
The REIT manager’s had first acknowledged in June of this year that it was being investigated by the Monetary Authority of Singapore and the Commercial Affairs Department of the Singapore Police Force.
The trust, which effectively lists 18 US hotel properties on the SGX, had defaulted on a $341 million loan facility in March. In August of this year the trust’s auditor, KPMG, declined to certify the REIT’s 2019 books.
REIT Manager Responds
In a statement to the Singapore exchange today Eagle Hospitality Trust’s manager acknowledged receipt of the regulator’s notice and indicated that the breaches were beyond its control.
In its statement, the REIT manager said that the violations cited had occurred despite enhanced monitoring put in place by the company following initial directions from the MAS in April, and notwithstanding repeated efforts by a special committee put together by the manager’s board.
The trust’s manager went on to inform holders of its securities that it “is working with its professional advisers to assess the implications of the Notice of Intention” from the MAS.
In the meantime Eagle Hospitality Trust’s manager says its directors will continue to discharge their fiduciary duties and act in the best interests of the REIT and its investors as long as it is retains its position.