Trustee of troubled Eagle Hospitality Reit proposes new manager

SINGAPORE (THE BUSINESS TIMES) - SCCPRE Hospitality Reit Management has been named the proposed new manager for troubled Eagle Hospitality Real Estate Investment Trust (EH-Reit), which is part of the stapled group Eagle Hospitality Trust (EHT).

The announcement was made a day after the Monetary Authority of Singapore (MAS) ordered EH-Reit's trustee to remove the current manager within one month and to appoint a new manager "as soon as practicable".

In a bourse filing on Tuesday morning (Dec 1), DBS Trustee confirmed that it received the financial regulator's directive on Monday, and will remove the incumbent manager.

As for the proposed incoming manager, that was decided following the trustee's discussions with EHT's financial adviser Moelis. They evaluated proposals from interested parties after a comprehensive request-for-proposal (RFP) process "that explored all options available to EHT to protect the interests of the stapled security holders", said DBS Trustee.

It noted that the proposed manager is wholly owned by SCCPRE Nineteen, and both entities are part of the SC Capital real estate private-equity group controlled and owned by Mr Suchad Chiaranussati.

The SC Capital group also includes Singapore-based SC Capital Partners, a fund manager focused on real estate investments in the Asia-Pacific; as well as the managers of two listed real estate investment trusts (Reits) in Asia, namely Japan Hotel Reit Investment Corp and Thailand Prime Property Freehold and Leasehold Reit.

DBS Trustee said the RFP took place over the last three months with 15 interested parties participating, and yielded "several comprehensive proposals". The process was concluded on Oct 28, after SCCPRE Hospitality Reit Management was selected.

The syndicate of lenders under the Bank of America (BofA) facilities agreement were receptive to engaging in discussions with SCCPRE Hospitality Reit Management on the proposal that the latter would be appointed as EH-Reit's new manager, the trustee said. BofA is the administrative agent for the lenders, which earlier demanded EHT repay its US$341 million (S$456.7 million) loan and restricted access to several bank accounts of the Reit and master lessees.

DBS Trustee on Tuesday added that the proposed manager's proposal was more compelling than the others, given SC Capital group's track record in managing and delivering strong asset performances, including the turnaround of Japan Hotel Reit.

Besides, the group has a network of relationships with hospitality players, and has shown a track record of raising capital from its financial partners for its private fund and listed Reit platforms.

SCCPRE Hospitality Reit Management's proposal also displayed a focus on the long-term rehabilitation of EH-Reit, according to the trustee.

The company's appointment and confirmation as the new manager is subject to it agreeing with DBS Trustee on the proposals for EHT, among other things.

Other conditions include the proposed Reit manager obtaining regulatory approvals and the relevant licences, and EHT stapled security holders giving their approval at an extraordinary general meeting (EGM).

DBS Trustee said that further details relating to the proposed appointment of the manager, the latter's proposal for EHT and the resolutions to be tabled at the EGM will be provided in due course for stapled security holders' consideration.

Regarding MAS' directive to remove the current Reit manager, the trustee believes that complying with it would serve the interests of stapled security holders, seeing as EHT's present circumstances "require that any recapitalisation and restructuring proposal (which includes the appointment of the new Reit manager) be presented to stapled security holders as soon as reasonably practicable".

MAS' directive followed a notice of intention (NOI) it issued on Oct 26, in view of multiple breaches of the Securities and Futures Act by the current manager, EH-Reit Management, as well as "serious concerns" over the manager's ability to comply with rules and regulations.

The NOI gave DBS Trustee and EH-Reit Management 10 days to respond as to why the manager should not be removed. But MAS said the written submissions it received raised "no new material facts".

Trading of EHT stapled securities has been suspended since March.