The Monetary Authority of Singapore (MAS) has issued a Notice of Intention (NOI) to direct DBS Trustee Limited, the Trustee of Eagle Hospitality Real Estate Investment Trust (EH-REIT), to remove Eagle Hospitality REIT Management Pte Ltd (EH-REIT Mgt), the Manager of EH-REIT and appoint a new manager. This is in view of numerous breaches of the Securities and Futures Act (SFA) by EH-REIT Mgt, and serious concerns over its ability to comply with rules and regulations.
2 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. 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. 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.
3 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.
4 MAS has serious concerns about the EH-REIT Mgt’s ability and commitment to comply with MAS’ rules and regulations. MAS therefore deems it necessary to direct DBS Trustee Limited to remove EH-REIT Mgt from managing EH-REIT and appoint a new manager.
5 MAS will announce its final decision after reviewing any written submissions from DBS Trustee Limited and EH-REIT Mgt, which will be given 10 business days to respond upon receipt of the NOI.
6 MAS expects all financial institutions to have rigorous systems and processes to ensure compliance with regulatory requirements at all times.
1 The Manager of EH-REIT has been operating in Singapore since 7 May 2019 and has been managing Eagle Hospitality Trust (EHT) since it was listed on the mainboard of the Singapore Exchange Ltd on 24 May 2019. Trading of EHT units was voluntarily suspended on 24 March 2020 after EH-REIT defaulted on a loan of US$341 million.
2 An NOI is intended to give the recipient an opportunity to make representations to MAS within a certain period of time, as to why MAS should not proceed with its intended action. MAS will consider any representations received and determine if it should proceed nonetheless with its intended action. If no representations are received, MAS will proceed on the basis that there are no comments.