MAS issues notice to remove manager of EH-Reit

living room set with green dumb cane plant

THE Monetary Authority of Singapore (MAS) has issued a Notice of Intention (NOI) to the trustee of Eagle Hospitality Reit (EH-Reit) to remove its manager and appoint a new one.

This is the first time that MAS has issued such a notice.

The notice comes following numerous breaches of the Securities and Futures Act (SFA) by EH-Reit Management, and serious concerns over its ability to comply with rules and regulations, said MAS.

Since it was licensed in May 2019, EH-Reit Management has committed multiple breaches of the SFA, including breaches of the minimum base capital and financial resources requirements, said MAS.

The central bank added that it has serious concerns about the management’s ability and commitment to comply with its rules and regulations.

It thus deems it necessary to direct DBS Trustee Limited, to remove the management.

EH-Reit Management had breached these financial requirements for the first time in the fourth quarter of 2019 but only informed MAS in April this year.

The management again breached the same base capital requirement for a second and third time on Aug 31 and Sept 30 respectively, MAS said, despite direction for it to rectify breaches and take steps to enhance the monitoring of financials.

Other breaches include not seeking MAS’ approval before providing financial assistance to a subsidiary, late submissions of regulatory returns and the failure to present to unitholders audited financial statements of EH-Reit within the stipulated timeframe.

MAS will announce its final decision after reviewing any written submissions from DBS Trustee Limited and EH-Reit Management, which will be given 10 business days to respond upon receipt of the NOI.

Trading in Eagle Hospitality Trust stapled securities – comprising EH-Reit and Eagle Hospitality Business Trust – were voluntarily suspended on March 24, after the manager defaulted on a loan of US$341 million.