SINGAPORE (THE BUSINESS TIMES) - Beleaguered Eagle Hospitality Trust (EHT) has posted a loss of US$8.9 million (S$12.7 million) for the first quarter to March, mainly due to the impairment loss on trade receivables arising from the uncertainty on the master lessees' ability to make rental payments and fulfil its obligations.
Therefore, there is no income available for distribution for unitholders of the hospitality stapled group comprising Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust (EH-BT), according to EHT's financial statements released on May 16.
EHT's revenue was US$16.6 million for the quarter, 24.4 per cent lower than its projected US$21.9 million. The dismal revenue performance, said the trust manager, was mainly due to the global pandemic where travel restrictions and stay-at-home orders were implemented in March 2020 - "a traditionally stronger month".
Similarly, its net property income at US$12.6 million was below the projected US$18.4 million by 31.7 per cent. The comparisons were made against projections as EHT was constituted only in April last year.
EHT's impairment loss on rental and non-trade receivables amounted to US$14 million, which more than wiped out the trust's earnings and resulted in a US$8.9 million loss. Projected bottom line was US$11.3 million. As a result of the uncertainty on the master lessee's ability to make rental payments and fulfil its obligations, EHT has fully impaired rental receivable from master lessees as of March 31.
Net asset value per stapled security as at March 31 was about US$0.83.
A total of 14 of hotels have shuttered, and the cessation of operations is expected to have a significant impact on both the fixed and variable rent EHT expects to receive in 2020 which were based on pre-pandemic forecast. Therefore, the Reit manager and the trustee-manager are withdrawing the profit and distribution forecasts for the financial year ending December 2020 set out in EHT's initial public offering prospectus.
The risk of EHT not being able to operate as a going concern was flagged in the financial statement, as it has been served notices of default that have culminated in at least US$341 million of secured loans and borrowings repayable within one year. This exceeds EHT's unrestricted cash and cash equivalents of approximately US$4.4 million as at March 31.
The Reit manager has separately announced that Bank of the West had served EHT a notice of termination of the interest rate swap agreement entered with EH-Reit. The US$18.3 million owed under the agreement has become due and payable, as a result of the notice.
Trading in EHT stapled securities has been suspended since March 24, 2020.