MAS Orders Removal of Eagle Hospitality REIT Manager

The Monetary Authority of Singapore (MAS) announced today that it had directed DBS Trustee Limited (Trustee), in its capacity as the trustee of Eagle Hospitality Real Estate Investment Trust (EH-REIT), to remove Eagle Hospitality REIT Management Pte Ltd (EH-REIT Mgt) as the Manager of EH-REIT. MAS also directed DBS Trustee Limited to appoint a new manager as soon as practicable. This direction follows MAS’ Notice of Intention (NOI) issued on 26 October 2020. The NOI issued orders to the Trustee to remove EH-REIT Mgt and appoint a new manager.

The NOI allowed the Trustee and EH-REIT Mgt to provide reasons against the removal of EH-REIT Mgt. In response to the NOI, EH-REIT Mgt’s shareholder, Mandarin West Holdings, LLC, provided written submissions to MAS. MAS has carefully considered the written submissions. As the written submissions raise no new material facts, MAS has proceeded to issue the direction to the Trustee.

MAS continues to have serious concerns with EH-REIT Mgt’s ability and commitment to comply with MAS’ rules and regulations. These concerns come mainly from the numerous breaches of the Securities and Futures Act (SFA). These breaches include recurrent and ongoing violations of capital and financial requirements. MAS will take stern action against any financial institution which does not comply with the authorities’ rules and regulations.

Eagle Hospitality REIT Breaches since 2019

The arrest of six of the EH-REIT’s current and former directors on suspicions of violations of the SFA came in early October. They were eventually released on bail.

Following their arrest, MAS issued a statement on 26th of Oct stating the violations of EH-REIT. “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”, the statement said. EH-REIT Mgt violated these financial requirements for the first time in the fourth quarter of 2019. However, they 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, the REIT manager breached the same base capital requirement for a second and third time on 31 August 2020 and 30 September 2020 respectively.

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