Investors have been fooled! $Eagle HTrust USD(LIW.SI)
I strongly believe they are not the only trust/reit doing such tricks, as the hot wave of trust/reits continues to keeps listing on SGX... investors do near zero due diligence and throw their money at all new reits as they are just so hungry for yield
so basically the assets are pass from one hand to another hand and finally to investors who subscribed for the shares via IPO, over the course the valuations gets marked up higher and higher so the first hand and second hand already made significant gains/profits...
like the music chair game, retail investors are the last one buying into these lousy assets at marked up/high valuations
please refer to article below by the edge
my personal view that this will definitely not be the only case, in the next 1-2 years to come as rates are held firm and reits get pressured, more worms will appear
Closer look at EHT's portfolio following Nov 2 replies to SGX
The Edge Singapore 3/11/2019, 11:09am
SINGAPORE (Nov 3): Since August, Claydon Hill Investments and Compass Cove Assets have been selling their stakes in Eagle Hospitality Trust. On Nov 2, EHT’s manager announced that Claydon Hill Investments subscribed to 141.44 million units at IPO, Compass Cove Assets subscribed to 120 million units and Bounty Green Assets 28.3 million units. As at Nov 2, Compass Hill has sold its stake down to 94.2 million units, and Claydon Hill Investments’ stake is down to 130.18 million units.
According to EHT’s announcement, the beneficial owners of Claydon Hill, Compass Cove and Bounty Green have a family relationship. Based on reports in the US press, Claydon Hill and Compass Cove invested in hotels on behalf of Chinese clients. They are also the managers/part owners of ASAP International Holdings whose unit Third Party ASAP6 Portfolio Vendors divested six hotels into EHT for the IPO process.
These hotels are: Sheraton Denver Tech Center, Crowne Plaza Dallas Near Galleria-Addison, Hilton Houston Galleria Area, Hilton Atlanta Northeast, Renaissance Woodbridge and Doubletree by Hilton Salt Lake City.
Crowne Plaza Dallas was purchased by ASAP for US$27.6 million ($37.4 million) and sold the hotel into EHT for US$50.7 million. Its adopted valuation in the REIT is US$57.8 million. ASAP acquired Renaissance Woodbridge for US$30 million and sold the property into EHT for US$67.1 million; the valuation adopted in the REIT is US$76.6 million.
ASAP acquired Doubletree by Hilton Salt Lake City in 2017 for US$31.38 million, the REIT acquired it for US$53.4 million at IPO and its valuation in the REIT is US$60.9 million.
Separately, questions are being asked about the repairs needed to keep The Queen Mary Long Beach operational. The lease agreement signed in 2016 between the City of Long Beach and Urban Commons – who is sponsor of EHT – is an annual rent paid to the City based on certain prescriptions such as base rent, pass through rent, percentage of net revenues and so on. The lease agreement calculates that the initial rent is around US$3.3 million a year. The 169-page lease agreement says the rents have annual escalations built in, in line with CPI. The lease is for 66 years.
In May this year, Urban Commons injected Queen Mary into EHT for which the REIT paid US$139.7 million. The major unitholders started to sell down EHT when memos and letters between the City and Urban Commons emerged in Sept and Oct, and the word default was mentioned in relation to repairs that need to be carried out by Urban Commons.
According to the lease agreement, the owner of Queen Mary allows Urban Commons to sublease the premises with Urban Commons securing the Landlord's prior written approval of all major subleases of above 20,000 sq ft.
While it is clear that the City owns the Queen Mary, it is not clear whether Urban Commons received permission to sublet the ship to EHT for US$139.5 million. In the event of default, the ship – presumably – reverts to the City.
Units in EHT are down a third to 52 US cents since its IPO price of 78 US cents. There is market talk that EHT’s manager may appeal to MAS for an early distribution of distributions per unit to unitholders after the release of its 3QFY2019 results instead of waiting till March 30, 2020. In addition, the EHT may announce a strategic review.