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Hidden Gem of e-Commerce REIT related to Alibaba
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JurongW
Elite |
09-May-2026 15:53
Yells: "Earnings give weight, Chart give wings" |
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https://links.sgx.com/1.0.0/corporate-announcements/G3ZESLLTC9E3Z5AJ/888203_ECW-Update%20on%20Legal%20Proceedings.pdf |
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cmengchan
Senior |
06-Feb-2026 08:58
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I did not follow this saga in much detail, but I think the other party holding the legal title of the property is from the local government. Even though both parties were deceived, I think their local courts will more likely side with their local government. It will be a tough battle to win back the property title. Moreover, the sponser also has some ownership in the REIT, so handling back the property title back to EC Reit would not make sense as the " guilty" sponser will also partially benefit if EC Reit won. Laws in China differs from SG.
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reggas
Member |
05-Feb-2026 19:32
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another foreign eagle....n sgx wanna open SZ=Sg connect us to more chin companies located in a land where rule of law is weak and cheats go free | ||
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Joelton
Supreme |
05-Feb-2026 09:38
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EC World Reit loses appeal over unauthorised mortgage of key Hangzhou property manager to seek re-trial The manager says the legal defeat will not require further adjustments to financial statements [SINGAPORE] The manager of EC World Real Estate Investment Trust (Reit) on Wednesday (Feb 4) said that the group&rsquo s appeal to invalidate an unauthorised mortgage was dismissed by the Hangzhou Intermediate People&rsquo s Court. The legal proceedings involve an outstanding mortgage over Fuzhou E-Commerce, one of the three properties owned by EC World Reit that were mortgaged without its consent or knowledge between Nov 20 and 24, 2023. The group previously applied to the People&rsquo s Court of Fuyang District to have these mortgage contracts declared invalid or revoked, but the applications were dismissed in April 2025. The Reit manager subsequently appealed to the Hangzhou Intermediate Court, which issued its judgment on Jan 29 this year, upholding the lower court&rsquo s decision to dismiss the appeal. Legal saga This latest setback continues a saga that began in early 2024 for the embattled Reit, the units of which have been suspended from trading since August 2023. The unauthorised mortgages &ndash which were also created for two other EC World Reit properties, Fuheng Warehouse and Hengde Logistics &ndash were in favour of two entities linked to the Fuyang government in China, based on a bourse filing dated Sep 1, 2024. While the unauthorised mortgages related to Fuheng Warehouse and Hengde Logistics have been discharged, the one over Fuzhou E-Commerce remains outstanding. Further legal action planned Despite the dismissal, the manager stated it intends to apply to higher-level courts for a re-trial of both the April 2025 and January 2026 judgments, based on recommendations from its China legal counsel. However, the manager cautioned that such an application is not considered a formal appeal of the January 2026 decision. In a separate development, two lawsuits initiated by Fuyang Futoufa &ndash one of the government-linked creditors &ndash against three of the Reit&rsquo s subsidiaries were heard in the Hangzhou Intermediate Court on Jan 28. One lawsuit was lodged against Fuzhou E-Commerce and Hengde Logistics in relation to guarantees signed on Sep 26, 2023, for a loan of up to 140 million yuan (S$25.7 million). The loan was granted by Fuyang Futoufa to Forchn, the Reit&rsquo s sponsor. The other lawsuit is against all three of the properties, in relation to guarantees they signed on Nov 20, 2023, for a loan of up to 120 million yuan granted by Fuyang Futoufa to the sponsor. These cases are currently pending further court processes, the manager said. Financial impact The manager noted that the legal defeat will not require further adjustments to its financial statements. A contingent liability of 268.6 million yuan related to these proceedings had already been recognised in previously announced financial results. As at last November, when its third-quarter update was released, the Reit continued to struggle with liquidity, reporting that current liabilities exceeded current assets by S$116.8 million. The manager indicated that it was &ldquo highly likely&rdquo no distribution will be declared for the 2025 financial year due to its inability to fulfil liabilities as they fall due. The board of directors on Wednesday stated it will continue to update unitholders on material developments. The real estate investment trust (Reit) did not declare any distribution for Q3 FY2025 and it is &ldquo highly likely that no distribution will be declared for the financial year 2025&rdquo , the manager said on Thursday (Nov 13). This comes as it is unable to fulfil its liabilities as they fall due, given its current cash situation, the manager added. As at Sep 30, the current liabilities of EC World Reit had exceeded the current assets by S$116.8 million. The Reit&rsquo s current liabilities include loans from its subsidiaries of close to S$331 million, which are repayable on demand. These loans will require repayment from EC World Reit if they are not refinanced or restructured, given that they were drawn down to fund the Reit and the group. EC World Reit&rsquo s revenue for the quarter fell 56.9 per cent on the year to S$10.8 million from S$25.1 million. The declines were attributed to the termination of four master leased agreements upon their expiries, lower contributions from underlying leases and the weakening of the renminbi against the Singapore dollar. However, this was offset by income contributions from new third-party leases secured for Hengde Logistics Phase I, the manager said. As at Sep 30, 2025, the Reit&rsquo s occupancy stood at 84.3 per cent, as its weighted average lease expiry was 0.9 year by gross rental income and 1.2 years by net lettable area. Update on legal proceedings The manager said in a separate announcement that it has appealed a ruling by the People&rsquo s Court of Fuyang District, Hangzhou, made in April 2025. The ruling dismissed the Reit&rsquo s application to invalidate the mortgage contracts concerning Fuzhou E-Commerce &ndash one of the three properties owned by EC World Reit that were mortgaged without its consent or knowledge between Nov 20, 2023 and Nov 24, 2023. The outcome of the appeal is currently pending in the Hangzhou Intermediate People&rsquo s Court, the manager said. The unauthorised mortgages &ndash which were also created for two other EC World Reit properties, Fuheng Warehouse and Hengde Logistics &ndash were in favour of two entities linked to the Fuyang government in China, according to a bourse filing dated Sep 1, 2024. The manager added that one of the Fuyang government-linked entities, Fuyang Futoufa, has inititated two cases against the three illicitly mortgaged properties, which are subsidiaries of EC World Reit. One lawsuit was lodged against Fuzhou E-Commerce and Hengde Logistics in relation to guarantees both signed on Sep 26, 2023, for a loan of up to 140 million yuan (S$25.7 million). The loan was granted by Fuyang Futoufa to Forchn, the Reit&rsquo s sponsor. The other lawsuit is against all three of the properties, in relation to guarantees they signed on Nov 20, 2023, for a loan of up to 120 million yuan granted by Fuyang Futoufa to the sponsor. EC World Reit&rsquo s units have been suspended from trading on the Singapore Exchange since Aug 31, 2023. |
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Joelton
Supreme |
17-Dec-2025 11:37
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EC World Reit granted more time until May 2026 to submit resumption proposal
SGX-ST has considered that it needs more time to work on proposals to meet its loan repayment obligations
[SINGAPORE] EC World Real Estate Investment Trust&rsquo s (ECW) application for more time to submit a resumption proposal was approved by the Singapore Exchange Securities Trading (SGX-ST), the Reit manager said in a bourse filing on Tuesday (Dec 16).
The waiver, valid until May 31, 2026, was granted on several conditions. This includes announcing the granting of the waiver, the reasons for seeking the waiver, as well as SGX-ST&rsquo s considerations.
ECW and its manager are also required to submit a written confirmation that they are not aware of any information that will have a material bearing on investors&rsquo decisions. &ldquo SGX-ST had considered that ECW required more time to work on its proposals to meet its loan repayment obligations,&rdquo the Reit manager noted.
These proposals cover four aspects, one of them the progress on ECW&rsquo s appeal against the judgments on the invalidity and revocation of the relevant mortgages over Fuzhou E-Commerce. The asset was one of the three properties owned by ECW that were mortgaged without its consent or knowledge in November 2023.
The second aspect is the potential global settlement arrangement for the repayment of outstanding receivables. Third, the potential internalisation of the Reit management function of ECW. Lastly, the potential divestment of one or more of the Stage 1 Properties of Bei Gang Logistics and Chongxian Port Logistics.
The Reit manager said that it had sought the waiver to work on resolving the material uncertainties related to some of these proposals, as well as the reorganisation of the sponsor Forchn Holdings and its potential impact on ECW, among other things.
A bourse update on Nov 27 indicated that a local court in Fuyang, Hangzhou, had in April dismissed ECW&rsquo s applications for orders on the invalidity and revocation of the unauthorised mortgages related to Fuzhou E-Commerce. The group&rsquo s Chinese legal counsel had recommended filing an appeal against these judgments.
The manager said then that its maximum financial risk exposure was estimated to be 268.6 million yuan (S$48.7 million).
Additionally, Fuyang Futoufa, a financial institution in Hangzhou, has initiated two separate cases against three of ECW&rsquo s subsidiaries.
The manager said that it believes it is in the interest of unitholders to resolve these issues before trading in its units resumes. This would &ldquo reduce the risk of ECW facing enforcement action from its lenders and other operational difficulties moving forward&rdquo . ECW&rsquo s units have been suspended from trading on SGX since Aug 31, 2023.
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Joelton
Supreme |
14-Nov-2025 11:01
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EC World Reit Q3 net property income down 60.5% illegally mortgaged units face 2 lawsuits
The Reit is suspended from trading, and it is unlikely to declare any distribution for FY2025
[SINGAPORE] The manager of EC World Reit : BWCU 0% posted a net property income of S$9 million for its third quarter ended Sep 30, a 60.5 per cent decrease from S$22.8 million in the corresponding year-ago period.
The real estate investment trust (Reit) did not declare any distribution for Q3 FY2025 and it is &ldquo highly likely that no distribution will be declared for the financial year 2025&rdquo , the manager said on Thursday (Nov 13).
This comes as it is unable to fulfil its liabilities as they fall due, given its current cash situation, the manager added.
EC World Reit&rsquo s revenue for the quarter fell 56.9 per cent on the year to S$10.8 million from S$25.1 million.
The declines were attributed to the termination of four master leased agreements upon their expiries, lower contributions from underlying leases and the weakening of the renminbi against the Singapore dollar.
However, this was offset by income contributions from new third-party leases secured for Hengde Logistics Phase I, the manager said.
As at Sep 30, 2025, the Reit&rsquo s occupancy stood at 84.3 per cent, as its weighted average lease expiry was 0.9 year by gross rental income and 1.2 years by net lettable area.
Update on legal proceedings
The manager said in a separate announcement that it has appealed a ruling by the People&rsquo s Court of Fuyang District, Hangzhou, made in April 2025. The ruling dismissed the Reit&rsquo s application to invalidate the mortgage contracts concerning Fuzhou E-Commerce.
The outcome of the appeal is currently pending in the Hangzhou Intermediate People&rsquo s Court, the manager said.
Fuzhou E-Commerce is one of the three properties owned by EC World Reit that were mortgaged without its consent or knowledge between Nov 20, 2023 and Nov 24, 2023. These unauthorised mortgages were created in favour of two entities linked to the Fuyang government in China, according to a bourse filing dated Sep 1, 2024.
The other two properties are Fuheng Warehouse and Hengde Logistics.
The manager added that one of the Fuyang government-linked entities, Fuyang Futoufa, has inititated two cases against the three illicitly mortgaged properties, which are subsidiaries of EC World Reit.
One lawsuit was lodged against Fuzhou E-Commerce and Hengde Logistics in relation to guarantees both signed on Sep 26, 2023, for a loan of up to 140 million yuan (S$25.7 million). The loan was granted by Fuyang Futoufa to Forchn, the Reit&rsquo s sponsor.
The other lawsuit is against all three of the properties, in relation to guarantees they signed on Nov 20, 2023, for a loan of up to 120 million yuan granted by Fuyang Futoufa to the sponsor.
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Joelton
Supreme |
14-Aug-2025 11:26
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EC World Reit&rsquo s H1 net property income falls 60.3% to S$18.7 million
Revenue also declines 56% to S$22.6 million
[SINGAPORE] EC World Real Estate Investment Trust (Reit) reported a 60.3 per cent decline in net property income to S$18.7 million in the first half of FY2025, as it continues to face significant financial and cash flow challenges.
Revenue fell 56 per cent to S$22.6 million, from S$51.2 million in the year-ago period, the Reit&rsquo s manager said in a bourse filing on Wednesday (Aug 13).
No distribution has been declared for H1, due to insufficient funds.
Trading in the Reit&rsquo s units has been suspended since August 2023, when the manager disclosed that ECW Group, comprising the Reit and its subsidiaries, could not fully repay its offshore interest expenses.
EC World Reit&rsquo s significant fall in revenue and net property income was due largely to the termination of master lease agreements upon the lease expiry of several assets. There were also lower contributions from underlying leases.
One of the assets with terminated master lease agreements is Fu Heng Warehouse in Hangzhou. EC World Reit previously said it was mortgaged without the consent or knowledge of its manager in favour of a local government-linked entity in China.
&ldquo The manager remains focused (on actively exploring) options to divest some or all of the group&rsquo s properties to pare down existing loan facilities with cash proceeds,&rdquo it said.
&ldquo At the date of this announcement, the group has not received any offer to purchase from potential buyers, nor any notice of enforcement action from the lenders,&rdquo it added.
&ldquo In the meantime, the manager, under the close guidance of all independent directors, continues to make its best endeavour to stabilise the performance of EC World Reit (and its subsidiaries) amid the ongoing persisting challenges from operation and financing activities.&rdquo
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Joelton
Supreme |
15-May-2025 08:23
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EC World Reit&rsquo s Q1 net property income more than halves to S$10.8 million as it looks to sell more assets to repay debt
Revenue down 49.9% to S$12.7 million from S$25.3 million
[SINGAPORE] EC World Real Estate Investment Trust&rsquo s (Reit) net property income for the first quarter of 2025 more than halved to S$10.8 million, from S$23.3 million in the same period last year.
Revenue was down 49.9 per cent to S$12.7 million from S$25.3 million year on year, the Reit manager said on Wednesday (May 14).
No distribution has been declared for Q1, due to insufficient funds. Trading of the Reit&rsquo s units has been suspended since Aug 31, 2023, when the manager disclosed that ECW Group, comprising the Reit and its subsidiaries, could not fully repay its offshore interest expenses.
Trading of its units will remain suspended until the financial situation improves, the manager said.
As at Mar 31, the accrued overdue rent receivables owed to ECW and its subsidiaries has exceeded 647.2 million yuan (S$119.4 million).
The management has been in negotiation with the sponsor for a master offset agreement to offset all the receivables from the sponsor group against its payables, the manager said.
However, the ongoing re-organisation of the sponsor may have an impact on negotiations, it added.
The manager is actively exploring options to divest some or all of the group&rsquo s properties to pare down existing facilities with cash proceeds in order to refinance or restructure its debt.
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Joelton
Supreme |
13-Nov-2024 10:02
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EC World REIT reports 3QFY2024 DPU of 0.401 cents, 56.2% lower y-o-y
EC World REIT has reported a calculated distribution per unit (DPU) of 0.401 cents for the 3QFY2024 ended September, down 56.2% y-o-y from the same period last year. Calculated DPU for the 9MFY2024 stood at 2.072 cents, 30.2% lower y-o-y.
Calculated distributable income for the 3QFY2024 stood at $3.2 million, down 56.2% y-o-y. This came on the back of lower revenue and higher finance cost within the quarter. Finance costs rose by 22.3% y-o-y to $14.4 million, due to higher interest rate for offshore facilities in the quarter.
The group&rsquo s 3QFY2024 revenue fell by 7.1% y-o-y to $25.1 million, while net property income stood at $22.8 million, down 7.8% y-o-y.
The REIT&rsquo s lower operating performance follows the discontinuation of China Tobacco leases in relation to Hengde Logistics Phase 1, lower rental income from Chongxian Port Logistics, and expiry of master lease agreement in August for Fuzhou E- Commerce.
As at Sept 30, the REIT&rsquo s gearing stood at 56.1%, exceeding the gearing limit imposed by the Monetary Authority of Singapore (MAS).
Portfolio occupancy for the period stood at 84.1%, while weighted average lease expiry came in at 0.7 year for gross rental income (GRI) and 1.6 years for net lettable area (NLA).
As at Sept 30, EC World&rsquo s bank borrowings stood at $466.3 million, comprising onshore and offshore loans of $124.9 million and $341.1 million, respectively.
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Joelton
Supreme |
08-Aug-2024 10:28
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EC World Reit H1 DPU down 18.6% to S$0.01671 on lower revenue, higher operating expenses
The manager says there will be no distribution for the period due to insufficient funds
EC WORLD Real Estate Investment Trust : BWCU 0%(EC World Reit) announced that its distribution per unit (DPU) fell 18.6 per cent to S$0.01671 for the first half ended Jun 30, from S$0.02053 in the corresponding period last year.
This was mainly due to lower revenue and higher operating expenses in the first half, said the Reit manager in a bourse filing on Wednesday (Aug 7), adding that there will be no distribution for the period due to insufficient funds.
This follows an 8 per cent drop in gross revenue to S$51.2 million in H1, from S$55.7 million a year ago. Net property income (NPI) was also down 8.9 per cent to S$47.2 million, from S$51.8 million the previous year.
The Reit manager attributed the lower revenue and NPI to the discontinuation of China Tobacco leases in relation to Hengde Logistics Phase 1 and lower rental income from Chongxian Port Logistics and higher operating expenses.
These were a result of the refund of land use tax in April 2023, which was mitigated partly by organic rental escalations and higher late-fee income, it said.
Meanwhile, finance costs rose 0.3 per cent year on year to S$22.9 million, primarily due to higher interest rates during the period. This was mitigated by a reduction in borrowings and extension fee incurred during the second quarter of FY2023.
Earnings per share (EPS) stood at minus 6.07 Singapore cents for the half year, reversing the positive EPS of 1.40 Singapore cents in H1 FY2023.
As at end-June, the overall occupancy for EC World Reit&rsquo s portfolio stood at 80.2 per cent, while the weighted average lease expiry by net lettable area was 1.5 years.
Goh Toh Sim, the chief executive officer of the manager, said: &ldquo On a semi-annual basis, the revenue in renminbi terms was 5 per cent lower compared to H1 FY2023. EC World Group has insufficient funds to maintain operations due to delays in collecting related party rent receivables and the non-completion of the proposed divestment. The manager is negotiating a master offset agreement to address outstanding rental receivables and payables between EC World Group and the sponsor group.&rdquo
He added that the Reit manager had completed the novation process to take over underlying leases from the master leases and other related party leases, and as a result, the group&rsquo s operating cash flows improved in H1 FY2024 in conjunction with the completion of the novation process.
The manager also noted: &ldquo Highly likely that no distribution for the financial year 2024 will be declared in light of the financial challenges present and ahead.&rdquo
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Joelton
Supreme |
05-Jun-2024 10:18
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Subsidiary, chairman of EC World Reit&rsquo s sponsor liable for US$11.3 million after loan default
The loan bore a principal amount of US$10 million for a term of six months
AN application has been filed against Forchn International (FIPL) and the chairman of its parent company for an order that they are jointly and severally liable to pay US$11.3 million to Franklin Medici Alternative Investment.
Forchn Holdings Group, the parent company of FIPL, is also the sponsor of EC World Real Estate Investment Trust (Reit).
EC World Reit&rsquo s manager said on Tuesday (June 4) that it was informed by FIPL on Monday that it entered into a loan agreement with Franklin Medici Alternative Investment on or about Feb 27 last year.
The loan bore a principal amount of US$10 million for a term of six months.
At the same time, a wholly owned subsidiary of FIPL &ndash Forchn Global &ndash entered into a deed of charge for 58 million units in EC World Reit to secure the repayment obligation of FIPL.
Zhang Guobiao, chairman of Forchn Holdings Group and EC World Reit, provided a personal guarantee in favour of Franklin Medici Alternative Investment.
FIPL failed to repay the loan and, as at May 19, the outstanding principal amount and the accrued interest amounted to US$11.3 million.
The manager said it understands that FIPL and Zhang are negotiating with Franklin Medici Alternative Investment on possible settlement plans.
The board of directors of the manager will give further updates as and when there are material developments.
EC World Reit&rsquo s units have been suspended from trading on the Singapore Exchange since Aug 31 last year, after its manager said the Reit and its subsidiaries were unable to fully repay their offshore interest expenses due on that day.
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MrBear12
Supreme |
14-May-2024 10:44
Yells: "Cast all our anxieties on Jesus for He cares for us" |
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Discard. | ||
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Joelton
Supreme |
14-May-2024 10:38
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EC World Reit Q1 calculated DPU down 19.8% to S$0.00904 on lower revenue, higher financing cost
Distributable income fell 19.8% on year to S$8.1 million, from S$10.1 million the year before
EC WORLD Real Estate Investment Trust&rsquo s : BWCU 0%(EC World Reit) calculated distribution per unit (DPU) fell 19.8 per cent to 0.904 Singapore cent for the first quarter ended Mar 31, from 1.127 Singapore cents the year before.
The Reit manager attributed the lower calculated DPU to higher financing cost and lower revenue in its bourse filing on Monday (May 13).
Gross revenue was down 10.1 per cent to S$25.3 million for the quarter, from S$28.1 million in the year-ago period.
Net property income (NPI) dropped 10.6 per cent to S$23.3 million, from S$26.1 million in the same period for FY2023.
The lower revenue and NPI were due to the discontinuation of China Tobacco leases in relation to Hengde Logistics Phase 1, lower rental income from Chongxian Port Logistics, and a weakening of the renminbi against the Singapore dollar, mitigated partly by organic rental escalations, higher late fee income and lower operating expenses at the properties, said the manager.
Distributable income also declined 19.8 per cent year on year to S$8.1 million, from S$10.1 million the year before.
Average occupancy for EC World Reit&rsquo s portfolio dropped to 71.3 per cent as at Q1, down from 96.8 per cent in the same period last year. Of the seven properties in the Reit&rsquo s portfolio, only the Stage 1 Properties of Bei Gang Logistics achieved full occupancy.
Weighted average lease to expiry by gross rental income and net lettable area stood at one year and 1.1 years, respectively.
The manager also announced that the Reit was not able to make distribution to unitholders for the H1 2023 period which was to be paid on Sep 28, 2023, due to insufficient funds.
&ldquo The payment of the H1 2023 distribution will be deferred to a future date when EC World Reit has sufficient free cash for the distribution,&rdquo it said.
There was no distribution announced for H2 2023.
Noting that the ongoing unauthorised mortgages imposed over two of its properties &ndash Fuzhou E-commerce asset and Fuheng Warehouse &ndash have not yet been discharged, the manager said: &ldquo EC World Reit will continue to face serious financial stress in the short to medium term while the trading of the units of EC World Reit will continue to be suspended until the financial situation has improved.&rdquo
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Alignment
Elite |
02-Feb-2024 20:37
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Who owns the manager? Not the sponsor? | ||
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Joelton
Supreme |
02-Feb-2024 09:41
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EC World Reit seeks legal action against sponsor in China as illegal mortgages not removed by deadline
THE manager of EC World Real Estate Investment Trust (Reit) said the group is initiating legal action to push for the discharge of illegal mortgages.
It noted that the illegal mortgages imposed over Fuzhou E-Commerce and Fuheng Warehouse have not been discharged as of Thursday (Feb 1), as the sponsor Forchn is still exploring various options.
Since the mortgages were not removed by the deadline of Wednesday, the EC World Reit group is in the process of launching legal action against Hangzhou Fuyang Futoufa Zhenfu Equity Investment and Zhejiang Fuyue Finance Lease Co &ndash the two entities linked to the Fuyang government involved in the mortgages &ndash as well as Forchn in China for the discharge of the illegal mortgages.
The manager said this design was made after discussions with the lenders and DBS Trustee. It added that the board is also evaluating various options for the Reit.
The Reit&rsquo s lenders had previously given the sponsor until Wednesday to remove the remaining two illegal mortgages. The mortgage over Hengde Logistics, one of the three illegal mortgages, was discharged by the Chinese government, based on the manager&rsquo s announcement on Jan 18.
All three illegal mortgages were imposed between Nov 20 and Nov 24, 2023, in favour of the two Fuyang government-linked entities in Hangzhou for loans of 268.6 million yuan (S$51.3 million) to the sponsor.
The manager had on Jan 24 explained the process lapses leading to the illegal mortgages, in which the property manager in China bypassed the internal process to lend relevant seals to the sponsor for the mortgage applications.
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Joelton
Supreme |
30-Jan-2024 13:50
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Joelton
Supreme |
25-Jan-2024 11:57
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EC World Reit explains lapses leading to illegal mortgages, says property manager bypassed processes
THE manager of EC World Real Estate Investment Trust : BWCU 0% (Reit) said that its property manager in China bypassed internal processes to lend seals and documents to the sponsor, Forchn Holdings, for illegal mortgage applications.
This was in response to Singapore Exchange Securities Trading&rsquo s (SGX-ST) queries on the processes that led to three mortgages for loans of 268.6 million yuan (S$50.3 million) taken by Forchn without the Reit manager&rsquo s consent.
In a bourse filing on Wednesday (Jan 24), the Reit manager said that the property manager, Yuntong Property Management, relied on the approvals of Forchn&rsquo s chief executive officer to lend the relevant seals and stamps, as well as the title deeds, to the sponsor&rsquo s treasury department.
It noted, however, that the sponsor CEO, Zhang Zhangsheng, has no authority to grant such approval. &ldquo The internal written request to the sponsor CEO deviates from EC World Reit&rsquo s existing control procedures,&rdquo said the Reit manager, adding that the sponsor&rsquo s treasury department had bypassed such procedures.
The Reit manager also responded to a Jan 17 article in The Business Times, which had raised the question of why the property management teams held the seals and title deeds despite not having the authority to do so. It said that it was &ldquo necessary&rdquo for the property manager to have access to the relevant seals, stamps and deeds to carry out its duties.
Title deeds have to be kept in China due to ad-hoc inspections from stakeholders including insurers and government authorities they also need to be used for litigation and financing-related registration, the Reit manager said.
It also clarified that, under Chinese law, &ldquo the mere possession of a title deed does not give the possessor any right in relation to the relevant property&rdquo , and does not entitle the possessor to register a mortgage over said property.
&ldquo Instead, the key documents required for mortgage registration generally include the mortgage agreement and other application materials affixed with the mortgagor&rsquo s relevant company seal and submitted in the name of the mortgagor.&rdquo
The Reit manager added that the seals and stamps are needed by the property manager to carry out other operations, including the approval of company resolutions and the filing of documents with government authorities.
On Jan 2, the Reit manager revealed the three mortgages over its Chinese properties: Hengde Logistics, Fuzhou E-Commerce and Fu Heng Warehouse. It said on Jan 18 that one of the three mortgages had been discharged, and that the sponsor was working on solutions to discharge the remaining two mortgages.
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Alignment
Elite |
20-Jan-2024 20:14
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This is also what happened to me in my UK example. In this case though, the Chinese authorities have moved much quicker than those in the UK did - it took close to a year from memory. Chinese authorities quite impressive. | ||
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Joelton
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19-Jan-2024 09:31
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1 of 3 illegal mortgages on EC World Reit&rsquo s properties discharged by Chinese authority
ONE of the three illegal mortgages imposed on EC World Real Estate Investment Trust&rsquo s (EC World Reit) Chinese properties has been discharged by the government&rsquo s land regulation arm.
This is based on a Real Estate Mortgage De-registration Certificate issued by the Hangzhou Bureau of Planning and Natural Resources, provided by the Reit&rsquo s sponsor Forchn Holdings Group, said the Reit manager on Thursday (Jan 18).
The discharged mortgage was over Hengde Logistics, one of six Hangzhou properties owned by EC World Reit.
The sponsor is said to be working on solutions to discharge the remaining two illegal mortgages on Fuzhou E-Commerce and Fu Heng Warehouse.
The manager, EC World Asset Management, said it has verified and confirmed the accuracy of the information with its onshore security agent.
All three illegal mortgages were imposed between Nov 20 and Nov 24 in 2023, in favour of two Fuyang government-linked entities in Hangzhou for loans of 268.6 million yuan (S$50.3 million) to the sponsor.
The Reit manager said on Jan 2 that the sponsor had taken out the mortgages without its knowledge and consent. It only learnt about the illegal mortgages from its onshore security agent.
Since Jan 5, the manager has taken control of the company and legal representative seals, as well as the contract and finance stamps from the property management teams in China.
The sponsor updated unitholders on Jan 15 that a lapse in the approval process resulted in the illegality of the three mortgages.
Trading of EC World Reit : BWCU 0% units has been suspended since Aug 31, 2023, after the manager said that the Reit and its subsidiaries were unable to fully repay their offshore interest expenses due.
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Joelton
Supreme |
17-Jan-2024 09:44
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EC World Reit, AEM have more explaining to do over their shocking failings in internal controls
EC WORLD Real Estate Investment Trust (Reit) : BWCU 0% and AEM Holdings : AWX +2.26% made a couple of shocking disclosures concerning their assets in the past fortnight. But instead of arming investors with information to make reasoned decisions &ndash as disclosures should &ndash the announcements raised questions about the companies&rsquo inadequate internal controls and communication.
EC World Asset Management, the Reit manager, announced on Jan 2 that the Reit&rsquo s sponsor, Forchn Holdings, had &ndash without its knowledge and consent &ndash taken out mortgages in November 2023 on three of the Reit&rsquo s seven properties for loans of 268.6 million yuan (S$50.3 million) to the sponsor.
The Reit&rsquo s manager appeared to have only learned about the &ldquo illegally procured&rdquo mortgages from its onshore security agent.
In an update filed on Monday (Jan 15), the manager detailed the possible impact of the unconsented mortgages on the Reit, including events of default and cross-defaults in the Reit&rsquo s onshore and offshore facilities.
An event of default would give the lenders the right to demand early repayment of the loans, the Reit manager pointed out.
The manager has now taken control of all stamps &ndash including the relevant company seals and legal representative seals &ndash from the property management teams in China, as well as the title deeds of the Reit&rsquo s properties from the property manager.
The manager is also in the process of appointing an external auditor to review the internal controls and processes of the Reit at the asset level, and is seeking legal advice on potential legal actions.
EC World Asset Management has set out the possible consequences of the illegally procured mortgages and the circumstances under which they came to be executed by the sponsor.
However, one detail was still glaringly missing: why were the property management teams holding on to the seals and title deeds when the property manager has no authority to do so?
The Reit&rsquo s initial public offering prospectus filed in 2016 clearly set out the property manager&rsquo s responsibilities: to provide property and lease management services, marketing services and property maintenance and repair services for the Reit&rsquo s properties.
According to the prospectus, the Reit trustee &ndash DBS Trustee &ndash holds the assets of EC World Reit on trust for the benefit of the unitholders. In fact, the trustee &ldquo must retain EC World Reit&rsquo s assets, or cause (the) assets to be retained, in safe custody&rdquo , the document read.
In response to queries from The Business Times, a DBS Trustee spokesperson said: &ldquo DBS Trustee is closely engaging with EC World Asset Management to ensure that the matter is properly handled and remediated in the interests of unitholders.&rdquo
Notably, the prospectus had set out measures to mitigate risks arising from possible unauthorised actions by a legal representative from the China-incorporated companies that own the Reit&rsquo s properties. These include safeguarding the company seals so they may only be used with written approval by both the chief financial officer and one of the two executive directors of the manager.
However, the measures do not appear to have been implemented.
In this light, it is only fair that unitholders should not be made to bear the cost of possible remedies, including legal fees that may be incurred.
Separately, AEM on Sunday said it had uncovered a shortfall amounting to between 5 per cent and 7 per cent of its last reported inventory of S$358.6 million in November. The stocktaking exercise finding is expected to negatively impact the semiconductor equipment maker&rsquo s profitability for FY2023.
The group attributed the shortfall to &ldquo human error in transactions&rdquo with its enterprise resource planning system, which had occurred during the migration of production to its Penang facility from Singapore.
In the five-paragraph regulatory filing, AEM said these errors were not detected by the existing controls and processes, but added that it has started a review of its inventory and stock monitoring and tracking processes and systems.
As in the case of EC World Reit, AEM&rsquo s level of disclosure was sorely inadequate.
Corporate governance advocate and accounting professor Mak Yuen Teen estimated that AEM&rsquo s pre-tax profit excluding exceptional items would be overstated by S$18 million to S$25 million. Describing this overstatement as &ldquo clearly material&rdquo , the academic noted that AEM&rsquo s pre-tax earnings excluding exceptional items amounted to S$42.6 million for the nine months to September.
He criticised AEM for not spelling out the expected impact on profitability in dollar and percentage terms.
&ldquo Yes, one can calculate the impact on profitability if one knows basic accounting, but the lay investor may think it&rsquo s (only) a 5 to 7 per cent impact on profit when it&rsquo s going to be a lot more,&rdquo Prof Mak said.
&ldquo Some investors may have bought shares on account of the November update&hellip AEM is not a small company (it has a) market cap of about S$1 billion. It is disappointing that something like this can happen, and raises questions about its internal controls.&rdquo
EC World Reit and AEM are not newbies on the stock exchange, and should know better that the information they had disclosed &ndash or not &ndash was material.
They owe investors a duty to make the information as crystal clear as possible.
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