Kamis, 13 Agustus 2020 22:28:00
Urban Commons Issues Notice of Breaches to Eagle Hospitality Trust
Eagle Hospitality Trust receives Notice of Breaches (Legal Notice)
Urban Commons has directly contributed approximately US$10 million more to Eagle Hospitality Trust than hotel-level generated income to support the REIT
In addition, Urban Commons' affiliate, as the parent company of the REIT Manager, has injected almost US$6 million into the REIT Manager to support operations
Urban Commons clarifies the one-sided announcements stemming from Eagle Hospitality Trust
Urban Commons' intention is to collaborate and save the REIT
SINGAPORE - 12 August 2020 - In a Breach Notice sent to Eagle Hospitality Trust (EHT or REIT), Urban Commons (UC or Sponsor or Master Lessee), the Los Angeles-based real estate investment and development firm and Sponsor of EHT, has intimated that the amount of funds it has injected into EHT over the past year are outstanding and due for repayment.
The Sponsor has a plan to provide critically needed financial support to EHT; however, it has been unable to obtain cooperation to implement this plan from the designated trustee, DBS Trustee Limited (Trustee), the Special Committee (SC) and EHT's third party advisors and consultants.
Prior to March 2020, there was no default from operations and yet, since the onset of COVID-19, the Sponsor has been targeted with allegations. In contrast, the Sponsor wishes to highlight that its portfolio of non-REIT assets, thanks to careful and collaborative negotiations with creditors, has not defaulted. This demonstrates the Sponsor's ability to navigate through this difficult period of economic hardship due to COVID-19 and other unexpected calamities.
The Notice also points out that despite the millions of dollars in excess of the audited hotel income that the Sponsor has provided to EHT to subsidise rent and other reserves paid by the hotels under the Master Lease Agreements (MLAs), EHT and its advisors have levelled allegations against the Sponsor and Master Lessee. This has forced the Sponsor to issue the Legal Notice to ensure that the unitholders, regulatory authorities, and the general public are aware of both sides of the story.
Since the crisis triggered by the COVID-19 pandemic struck, the Sponsor has tried to approach the Trustee with proposals, in the hope of stabilising the position of EHT. To date, however, these plans have not been met with constructive responses from the Trustee.
The Sponsor is saddened to discover that it appears substantial amounts of EHT's cash, potentially worth millions of dollars, is being spent each month as retainer fees for professional consultants who are refusing to work with the Sponsor to find a way out of the crisis.
Instead of working with the Sponsor, announcements have been published without reflecting submissions from the Master Lessee and its US Counsel over the last few months. This has left the Sponsor with no choice but to serve the Legal Notice and also to highlight that EHT has legal obligations to the Master Lessee which are not being fulfilled.
The Sponsor believes it is time to put the record straight in relation to the REIT's description of alleged missed rent payments, financial discrepancies, and recent defaults.
The Sponsor is using this opportunity to explain that it has not benefitted financially since the IPO and, on its part, has done everything it could to help the Lessees maintain the monthly Fixed Rent, worth millions of dollars above the total income produced by the hotel properties, and provided urgently needed property maintenance costs despite adverse conditions, keeping the interests of EHT and its unitholders in mind.
In relation to the above, Mr. Howard Wu and Mr. Taylor Woods, Co-Founders and Principals at Urban Commons, have issued the following statement:
"It saddens us to issue such a notice to EHT but we feel we have exhausted all other avenues to find an amicable solution to the differences between EHT, the Trustee and Urban Commons. Multiple plans aimed at resolving the issue, circulated by us since April this year, have not been met with constructive responses from EHT's advisors. Furthermore, their comments may have led EHT into taking unnecessary steps that appear to have not only consumed precious time during a global pandemic, but also millions of EHT unitholders' dollars.
"COVID-19 has resulted in unprecedented challenges for the hospitality industry worldwide, and as the Sponsor and one of the major unitholders of EHT, UC wants to apologise to all unitholders regarding how the current situation has escalated. At the onset of the pandemic, the Sponsor did not anticipate COVID-19's path of destruction, however, now is the time to unite and work together collaboratively to navigate out of this pandemic.
As one of the largest unitholders, the merits of our plan is to minimise cost, refinance the defaulted Bank of America Merrill Lynch (BAML) debt, control unnecessary expenses, minimise dilution for all unitholders and raise enough funds to survive COVID-19. Since April, we have been sharing with EHT's advisors extensive strategies to navigate the storm and these plans have, to date, not been responded to by these advisors in a constructive or collaborative spirit. This meaningless conflict is a recipe for disaster, especially during an unprecedented pandemic situation." (*).