An FAQ released by Eagle Hospitality Trust’s REIT trustee makes for painful reading. Most of it is a summary of the ill-fated stapled-security’s brief time as a listed entity on the Singapore Exchange. (EHT was a stapled security, comprising of an inactive business trust and EH-REIT.)

However, there are interesting snippets. The REIT Trustee confirms that minority stapled securityholders will most probably not be getting any of the Chapter 11 sale proceeds. “Even though results of the sale process for the sale of 14 of EHT’s properties yielded US$478.6 million in net proceeds, it is unlikely based on the debt profile of the Chapter 11 Entities, and subject to the claims resolution process, that claims of all unsecured creditors of the Chapter 11 Entities will be satisfied in full from the sale proceeds, after accounting for various secured claims. The sale proceeds are therefore not expected to result in a recovery for Stapled Securityholders.”

According to another question, EHT had US$89 million of cash in April 2020. What happened to the cash? The answer is telling on how irresponsible the sponsor - who was also the Master Lessee of EHT’s 18 properties - was. The cash, it appears, was used for various payments under the Master Lease Agreements which were not paid by the Master Lessees which was Urban Commons, the sponsor. Among other unpaid dues, these included real estate taxes and transient occupancy taxes, as well as penalties and interest; premiums for mandatory insurance; the need to defend against litigation brought against EHT in the US for various defaults and actions of the Master Lessees (ie Urban Commons); and funding of certain expenses related to the franchisors’ unpaid fees and expenses dating back to as early as 2019.

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