Eagle HTrust USD    Last:0.137   -

EAGLE Hosp Reit US$ @$0.780 cents

DBS BANK LTD' S ROLES IN EHT

What level of due diligence (market reputation, financial resources) was done by DBS and SGX on the sponsor at the time of the IPO?

DBS Bank Ltd. was the sole financial adviser and issue manager for the initial public offering of Eagle Hospitality Trust.

DBS Bank Ltd is a lender in the US$341 million syndicated loan granted to EHREIT, 

DBS Trustee Limited, in its capacity as trustee (the &ldquo REIT Trustee&rdquo ) of Eagle Hospitality Real Estate Investment Trust (&ldquo EH-REIT&rdquo ) h
 

 

 

9. What level of due diligence (market reputation, financial resources) was done by DBS and SGX on the sponsor at the time of the IPO?
Even prior to Covid-19 effect on the US hospitality market, it would appear that the sponsor has insufficient financial resources to support the master lease rental payments, which is the key supporting point for the asset valuations injected into the REIT at IPO. Many feel that insufficient due diligence was conducted. Could the situation have been avoided?



Whether these delinquencies could have been avoided by pre-IPO processes is not something that the REIT Trustee is in a position speculate on. In particular, the REIT Trustee was not directly involved in the due diligence process for the IPO.

8. Are you not also a creditor to EHT? Therefore, is your role as REIT Trustee a conflict of interest and not beneficial to minority shareholders?

Aside from any accrued but unpaid trustee fees, the REIT Trustee is not a creditor of EHT. The REIT Trustee has consistently exercised its duties with due care and diligence, and without conflict, and continues to do so. DBS Bank Ltd (&ldquo DBS Bank&rdquo ) is a lender in the US$341 million syndicated loan granted to EHREIT, but that does not concern the REIT Trustee. The REIT Trustee is a separate legal entity and acts separately from DBS Bank. 

 

So far only these 2 investors have sued.   

Joelton      ( Date: 30-Jun-2021 09:22) Posted: EHT unitholders file lawsuit against manager' s board, claiming shortfalls in disclosure A key allegation is that the six defendants would have known that late payment of security deposits was information relevant to investors and securityholders' investment calls   TWO investors of the beleaguered Eagle Hospitality Trust (EHT) are suing six of its manager' s former and current directors for failing to make material disclosures from the time the stapled securities were offered to when the trust collapsed in or around March 2020.   Ajeet Gobindram Vaswani, a retiree, is claiming US$1.55 million for the 2,632,000 stapled securities he holds in EHT Viresh Ajeet Vaswani, an entrepreneur, is claiming US$305,000 for his 448,000 units.   The father-son pair, who believe they are the second and third-largest investors in the trust, filed their statement of claim before Singapore' s High Court on April 26.   The six defendants include the trust' s chief executive officer and president Salvatore Gregory Takoushian, lead independent director Davy Lau, and independent non-executive directors Carl Gabriel Florian Stubbe, Tarun Kataria, Kelvin Tan and Ng Kheng Choo.   All six were arrested last October on " reasonable suspicion" that disclosure requirements may have been breached. They were later released on bail. Mr Lau, Mr Kataria, and Mr Tan subsequently resigned from the firm' s board.   Ms Ng had resigned prior to the arrests in March 2020, while Mr Stubbe was removed from directorship in August 2020.   The stapled group comprises Eagle Hospitality Real Estate Investment Trust (EH-Reit) and Eagle Hospitality Business Trust. EHT' s initial portfolio included 18 hotel properties in the United States, with a total of 5,420 rooms and an aggregate valuation of approximately US$1.27 billion.   EHT filed for Chapter 11 bankruptcy in the United States Bankruptcy Court in January 2021. The Singapore High Court in March issued a winding up order against Eagle Hospitality Reit Management, the previous manager of EH-Reit.   Trading in EHT has been suspended since March 2020, after the Bank of America issued its managers with a demand for immediate repayment of a US$341 million loan.   One chief allegation in the plaintiffs' case centres on the failure of the master lessees to pay security deposits totalling US$43.7 million as well as monthly rentals on time.   As directors, the six defendants would have been informed and/or consulted, and would have thereafter approved any extensions to make payment. But these matters were not disclosed promptly, or at all, until trading was halted on March 19, argued the plaintiffs, who are represented by Paul Tan of Clifford Chance Asia.   Given that a significant part of the trust' s valuation, financial viability and stability rested on the timely receipt of the security deposits, these would have been material information relevant to investors' and securityholders' decisions to invest in additional units and/or retain their existing stakeholding, they argued.   In this case, the master lessee was a company owned by EHT' s sponsor Urban Commons, a Los Angeles-based property investor and developer. Urban Commons was in turn owned by Howard Wu and Taylor Woods.   EHT units had in March received a go-ahead from a US court to investigate Mr Wu and Mr Woods, on the grounds that they allegedly bear the most responsibility for the trust' s financial woes.   The plaintiffs in the Singapore suit also allege that the trust' s prospectus and product highlights sheet contain inaccurate information and non-disclosures. For instance, they claim historical financial information concerning ASAP Holdings, which sold EHT' s sponsor six of the 18 hotels that formed its initial portfolio, was not disclosed.   There was incomplete or inaccurate disclosure of potential conflicts of interest involving Mr Stubbe who, while serving as an independent director reviewing a valuation report by Jones Lang LaSalle Americas (JLLA), was also negotiating senior employment with Jones Lang LaSalle Property Consultants (JLLPC), the plaintiffs also claimed.   Both JLLA and JLLPC are subsidiaries of global real-estate services company Jones Lang LaSalle Inc. JLLA was the independent market research consultant for the IPO.   The plaintiffs also alleged that the directors either knew or should have known of other " material information" , such as the resignation of a senior finance personnel, non-disturbance agreements that the master lessors (subsidiaries of EH-Reit) had entered into, the manager' s failure to maintain minimum capital and financial resources, and other defaults and liabilities. However, these were either not disclosed or not promptly disclosed, the plaintiffs claimed.   These failures were " compounded" by a series of announcements on the Singapore Exchange (SGX) which " portrayed the trust' s performance positively and sought to assure investors and securityholders" .   The directors had approved and allowed these announcements to be published despite their omission of material information, resulting in false, inaccurate and misleading statements, the plaintiffs alleged.   The plaintiffs relied on the defendants' contraventions to purchase or subscribe to the securities, or continued to hold on to them throughout the material period, and have thus suffered losses because of the trading halt and likely insolvency of the trust, they argued.   In their defences filed on June 11, the six defendants denied the claims. The trust' s chief executive Mr Takoushian argued that the prospectus had " expressly highlighted various risks associated with any investments into EHT" . It also specifically highlighted that there is no assurance that distributions would be as forecast, and that EHT would have sufficient distributable or realised profits, or surplus in any future period, to make dividend payments, he said. He is represented by Drew & Napier' s Wendell Wong.   Ms Ng, represented by Daniel Chia of Morgan Lewis Stamford, said both the plaintiffs are " sophisticated and accredited investors who are deemed to be better informed and have access to better resources to protect their own interests" .   She also argued that they " did not exhibit reasonable investor behaviour" by increasing their investments in the stapled securities over the period of October 2019 and February 2020 when the trust, Reit manager and sponsor were " facing increasing negative backlash from the media and the SGX" .   The defendants also sought to distance their directorships from the day-to-day affairs of the trust. Mr Takoushian, for instance, said he recognised his " inexperience" listing and managing a Reit, and thus " ensured that he would be assisted by a board of independent directors comprising seasoned and experienced business professionals with the relevant knowledge and experience serving in listed Singapore Reits" .   He also argued that as the Reit manager' s directors, the defendants do not owe any duties to the stapled securityholders in their personal capacities.   The said independent directors, who are also his co-defendants, in turn argued that they " were not engaged in, and were not expected to engage in, the day-to-day management and operations of the Reit manager and the affairs of the trust" . They claimed they had instead relied on representations and assurances made by the management, including Mr Takoushian, Howard Wu and Taylor Woods.   Mr Lau, Mr Stubbe, Mr Kataria and Mr Tan are represented by Murali Pillai of Rajah & Tann.   Ms Ng, on the other hand, argued that some of the plaintiffs' claims deal with matters that predate her appointment to EHT' s board in October 2019.

 

This entire thing is such a con job sham one does not even know how to begin to talk about it. It is NOT that greedy investors took risks and chase a speculative hyped counter. Retails investor bought a hotel hospitality reit underwritten by DBS and followed prospectus plus company announcements. Yet it seemed due diligence was never there and shenanigans were unnoticed but retail investors paid the high price. How can a hospitality reit with primarily freehold properties go belly up and no one on this side of SGX listing be accountable? " Shameful" is the word on the underwriter and the regulators. All the talk about Singapore being a financial centre and use of foreign talent to raise our game - empty wind blowing, it seems (PS : NOT interested to launch any political statement. Just making a view point). 

 

I am a retail shareholder who bought the eht   reit based on valuation report of the hotels and thought that I have a good deal . Shortly after buying the share was suspended which was a great shock because dividends was declared for this reit and even went xd which   gives me confidence to buy because if there is no money to pay it would have been highlighted by auditors . The hotels are in America which has no lock down and I guess people would book into these hotels since they cannot travel overseas so wasn' t so bothered by chapter 11. I was hoping that the hotels will be profitable again since this is a pandemic and the reit will be protected from creditors during this period.   Why appoint a trustee to auction away the properties so fast to make sure the creditors are paid and shareholders get nothing. Can the authorities please look into the interest of the many   retail shareholders.

 

I cannot believe that Singapore being a well known financial hub and SGX always claiming to expand their financial instruments and protect investors interest are not looking into the interest of minority uniholders.

This entire liquidation exercise undertaken by DBS Trustee, I can only see how they are trying to liquidate assets and recover money back for DBS bank. What happen to the interest of minority investors. We have been persuaded to invest money into an IPO which is a scam and DBS &   SGX being parties in promoting this IPO are not coming out to see for the general public who put their trust and faith in the regulatory system. There is no justice and we can' t just keep silent and let them close the case. We need to know the truth and the poor investors who have put money into EHT need to be compensated.

All those who have been affected financially and emotional should speak up and make sure the government is aware and uncover the truth.

 

Really aghast that DBS and DBST all just walk away, while the Regulator and SGX just sit by without doing anything to help.  Incredible.  I am speechless that this type of scam can just walk away without any consequences.

shk363      ( Date: 15-Jul-2021 21:10) Posted: TLDR: the investors lost money but everyone else make money from EHT.

 

TLDR: the investors lost money but everyone else make money from EHT.

 

Then why need to pay DBS for ipo? What is role of Dbs when EHT went ipo?

 

EH-Reit stapled securityholders unlikely to see compensation from sales proceeds

Sales proceeds from the sale of Eagle Hospitality Trust (EHT) properties are unlikely to reach minority investors, DBS Trustee said in a release on Thursday.

It had worked with the Securities Investors Association (Singapore) to produce a video presentation to update Eagle Hospitality Real Estate Investment Trust (EH-Reit) stapled securityholders and address their questions.

Though the sale of 14 of EHT' s properties yielded US$478.6 million in net proceeds, it is unlikely that the claims of all unsecured creditors will be satisfied in full, after accounted for various secured claims, said DBS Trustee, adding: " The sale proceeds are therefore not expected to result in a recovery for stapled securityholders."

EHT is a stapled group comprising EH-Reit and the dormant Eagle Hospitality Business Trust.

Responding to a question about whether it was also a creditor to EHT, which filed for Chapter 11 bankruptcy in January, DBS Trustee clarified that aside from any accrued but unpaid trustee fees, it is not a creditor of EHT.

It added that while DBS Bank is a lender in the US$341 million syndicated loan granted to EH-Reit, that does not concern DBS Trustee, which is a separate legal entity and acts separately from DBS Bank.

Stapled securityholders also asked about due diligence done on EHT' s sponsor, Urban Commons, at the time of its initial public offering (IPO).

" It is clear that that the post-IPO issues facing EHT are the result of, amongst other things, multiple delinquencies on the part of the previous master lessees with regard to the master lease agreements for all 18 properties in EHT' s portfolio," replied DBS Trustee.

It said it was not in a position to speculate on whether these delinquencies could have been avoided by pre-IPO processes, and noted that it was not directly involved in the due diligence process for the IPO.

 

 

But no one is suing them. LOL

 

Many trust the professionalism of DBS butgot scamed !

 

Totally agree.

 

No, i disagree. Hyflux is a ongoing company and people choose to invest in the bonds and shares.

But EHT went ipo and people rely on underwriters like dbs to do a proper due diligence? otherwise, why pay banks so much for ipo?

mrwise      ( Date: 13-Jul-2021 17:46) Posted: The same happened to hyflux. All mom n pop lose huge money....no one can do anything....u know y? laksaman57      ( Date: 13-Jul-2021 17:34) Posted: Who dare trust DBS or any bank as trustee to any reit IPO liao. No penalty for failing. Licence not revoked. Unitholders not compensated. Just a big joke on unitholders

 

DBS brought this SCAM into Singapore .

 

All go scot free, including the board of directors....so how good is our system...easy money for the rest but not for investors

mrwise      ( Date: 13-Jul-2021 18:11) Posted: The same happened to hyflux. All mom n pop lose huge money....no one can do anything....u know y? laksaman57      ( Date: 13-Jul-2021 17:34) Posted: Who dare trust DBS or any bank as trustee to any reit IPO liao. No penalty for failing. Licence not revoked. Unitholders not compensated. Just a big joke on unitholders

 

What can retail investors do even this SCAM is so obvious ? MAS and SGX made the mnies but act blur only !

 

No accountability, no enforcement, no outcome .. that the sad state of investment in spore.. a tarnish reputation to spore as a financial centre where the scams & cons roam freely ?

 

The saddest part is who has the accountability!! Retail shareholders rely on available market information and when there are clear shenanigans and no one on Singapore listing side takes any responsibility, this is sad.