Eagle Hospitality Trust

[Ray168]

Clarification on The Edge Singapore’s Article

Eagle Hospitality REIT Management Pte. Ltd., as manager (the “REIT Manager”) of Eagle Hospitality Real Estate Investment Trust (“EH-REIT”), and Eagle Hospitality Business Trust Management Pte. Ltd., as trustee-manager (the “Trustee-Manager”, collectively with the REIT Manager, the “Managers”) of Eagle Hospitality Business Trust (“EH-BT”) would like to make certain clarifications regarding The Queen Mary asset.

The REIT Manager refers to the article dated 23 October 2019 entitled “Eagle Hospitality Trust could get wings clipped as key asset The Queen Mary sinks into disrepair” by The Edge Singapore and related articles. The Edge Singapore article refers to a series of reports and a letter (the “Letter”) from the City of Long Beach (the “City”) to Urban Commons, LLC (“UC”), the sponsor of Eagle Hospitality Trust, stating that it has failed to meet obligations under The Queen Mary ground lease to make certain repairs required under the ground lease. When the REIT Manager became aware of the Letter, it immediately communicated with UC to seek clarifications on the Letter.

UC has confirmed to the REIT Manager that they are not in default on The Queen Mary ground lease and that The Queen Mary remains safe and structurally sound. UC has also informed the REIT Manager that they are preparing a response, which will be imminently released to the City addressing items referenced in the Letter. The response will include specific maintenance items that have already been completed, are underway and planned in the future for the long-term preservation of the ship.

More details in https://links.sgx.com/FileOpen/EHT-Clari...eID=582806

Mr Market is not happy with the Queen Mary issue, Eagle dive down ~10% to 58c.

Is this a fallen angel (Eagle)?

(Not vested)

[specuvestor]

More selling after clarification from the Sponsor and manager , another con job , thanks to SGX .

hi Stocker,
To be honest, I think it doesn't do one any favors if one has a tendency to find a bogeyman to blame. With this tendency, we never get to fully learn from our own mistakes since we never take ownership of them.

I read from the history of common equity markets that markets were set up with the main intention for insiders to cash out, not for outsiders to get rich. If the latter happens, it is just a side effect of the former. Rather than blaming reality, would it be better to recognize reality for what it is, and work accordingly to what it is?

I am not sure how much you are into this "blame game". But i assume it is pretty bad because you blamed SGX twice in <24hours. Of course, if i am wrong in my assumption, i do ask for your understanding.


P.S. Although i am a SGX shareholder but I don't think they are doing a great job of protecting people, nor am i interested to try to justify them. I am saying this from a POV of someone who likes to observe human behavior and want to correct my own behavorial biases to become a better investor.

Hi Weijian ,

I was merely stating the fact that many companies , including EAGLE , were admitted to list on SGX without proper screening from them . From S chips to.... the lists go on...... . Isn't it the job of our regulator to screen and make sure bonafide companies should be welcome , especially for EAGLE HT which was just listed in May this year .
The Truth  hurts !

The truth is: all exchanges including US has such issues. These are not new under the sun

So each exchanges have to balance between "wild west" and "penitentiary". Most have certain conditions and rules for listing in different boards to differentiate themselves. And to be fair I think SGX has been increasing surveillance in recent years with the new Regco with ex-CAD chief as CEO

Hence post these inital screenings it is still based on Caveat Emptor. Unless we think SGX should be much more tighter than it is now, even as SGX listings dwindles as many are complaining.

[tonylim]

This one got exposed a bit too fast , they never give face to sgx at all .

[specuvestor]

This one got exposed a bit too fast , they never give face to sgx at all .

From IPO to suspension, it took Tianhe 9 months, and that is if we disregard the 1 month suspension in September

https://www.scmp.com/business/investor-r...investment

[Dosser]

There are some more bullish posts on ShareJunction, and quotations of possible DPU and NAV if the Queen Mary lease was entirely written off. 

So, is the big drop today, and significant fluctuation, just a knee-jerk reaction by the risk averse, or due to concern over the quality of the management? The issue of the QM is hardly new - it has front and centre in reviews of this counter since before the IPO, so any worry would be over whether Urban Commons is dealing with the maintenance properly and whether the statement issued yesterday is an accurate reflection of the current situation.

[valueinvestor]

QM valuation of US$159m / total portfolio of US$1,270m in IPO prospectus : 12.52%

IPO at 0.78 - today's closing 0.545 = 30.1 %

Market cap shrinked by more than 2 QMs .

[Ray168]

Clarification on The Edge Singapore’s Article

Eagle Hospitality REIT Management Pte. Ltd., as manager (the “REIT Manager”) of Eagle Hospitality Real Estate Investment Trust (“EH-REIT”), and Eagle Hospitality Business Trust Management Pte. Ltd., as trustee-manager (the “Trustee-Manager”, collectively with the REIT Manager, the “Managers”) of Eagle Hospitality Business Trust (“EH-BT”) would like to make certain clarifications regarding The Queen Mary asset.

The REIT Manager refers to the article dated 23 October 2019 entitled “Eagle Hospitality Trust could get wings clipped as key asset The Queen Mary sinks into disrepair” by The Edge Singapore and related articles. The Edge Singapore article refers to a series of reports and a letter (the “Letter”) from the City of Long Beach (the “City”) to Urban Commons, LLC (“UC”), the sponsor of Eagle Hospitality Trust, stating that it has failed to meet obligations under The Queen Mary ground lease to make certain repairs required under the ground lease. When the REIT Manager became aware of the Letter, it immediately communicated with UC to seek clarifications on the Letter.

UC has confirmed to the REIT Manager that they are not in default on The Queen Mary ground lease and that The Queen Mary remains safe and structurally sound. UC has also informed the REIT Manager that they are preparing a response, which will be imminently released to the City addressing items referenced in the Letter. The response will include specific maintenance items that have already been completed, are underway and planned in the future for the long-term preservation of the ship.

More details in https://links.sgx.com/FileOpen/EHT-Clari...eID=582806

Mr Market is not happy with the Queen Mary issue, Eagle dive down ~10% to 58c.

Is this a fallen angel (Eagle)?

(Not vested)

Good read ... https://financialhorse.com/eagle-hospita...e-13-drop/

But to put things in perspective, UOB came out with a really nice report this morning ( https://research.sginvestors.io/2019/10/eagle-hospitality-trust-uob-kay-hian-research-2019-10-25.html ) that is well worth the read.

Based on UOB’s numbers, it says that even if Queen Mary is completely written down to zero, it’s FY2020F DPU will drop to 5.12 cents, and NAV drops to 69 cents.

Using the current price of 56 cents,  that works out to a 9.1% yield and a 19% discount to book, assuming Queen Mary is completely written down.

(vested now)

[GreedandFear]

Clarification on The Edge Singapore’s Article

Eagle Hospitality REIT Management Pte. Ltd., as manager (the “REIT Manager”) of Eagle Hospitality Real Estate Investment Trust (“EH-REIT”), and Eagle Hospitality Business Trust Management Pte. Ltd., as trustee-manager (the “Trustee-Manager”, collectively with the REIT Manager, the “Managers”) of Eagle Hospitality Business Trust (“EH-BT”) would like to make certain clarifications regarding The Queen Mary asset.

The REIT Manager refers to the article dated 23 October 2019 entitled “Eagle Hospitality Trust could get wings clipped as key asset The Queen Mary sinks into disrepair” by The Edge Singapore and related articles. The Edge Singapore article refers to a series of reports and a letter (the “Letter”) from the City of Long Beach (the “City”) to Urban Commons, LLC (“UC”), the sponsor of Eagle Hospitality Trust, stating that it has failed to meet obligations under The Queen Mary ground lease to make certain repairs required under the ground lease. When the REIT Manager became aware of the Letter, it immediately communicated with UC to seek clarifications on the Letter.

UC has confirmed to the REIT Manager that they are not in default on The Queen Mary ground lease and that The Queen Mary remains safe and structurally sound. UC has also informed the REIT Manager that they are preparing a response, which will be imminently released to the City addressing items referenced in the Letter. The response will include specific maintenance items that have already been completed, are underway and planned in the future for the long-term preservation of the ship.

More details in https://links.sgx.com/FileOpen/EHT-Clari...eID=582806

Mr Market is not happy with the Queen Mary issue, Eagle dive down ~10% to 58c.

Is this a fallen angel (Eagle)?

(Not vested)

Good read ... https://financialhorse.com/eagle-hospita...e-13-drop/

But to put things in perspective, UOB came out with a really nice report this morning ( https://research.sginvestors.io/2019/10/eagle-hospitality-trust-uob-kay-hian-research-2019-10-25.html ) that is well worth the read.

Based on UOB’s numbers, it says that even if Queen Mary is completely written down to zero, it’s FY2020F DPU will drop to 5.12 cents, and NAV drops to 69 cents.

Using the current price of 56 cents,  that works out to a 9.1% yield and a 19% discount to book, assuming Queen Mary is completely written down.

(vested now)

The UOB argument is similar to what caused my interest in this stock : currently, the share price implies that Queen Mary is worthless. That is definitely something that should pique our interest. However, the flaws in UOB's argument are :

(1) Even if Queen Mary is valued at zero, in a worst case scenario there could still be a substantial cash outlay to ensure that it doesn't sink/ make it safe to use as a floating hotel. If it does sink, someone will be on the hook to salvage it, transport it somewhere for disposal (ie cutting it into pieces) and paying someone to effect this disposal. In other words, although the Trust treats this as a piece of real estate, it is very different. With a building, you will normally be able to sell it because the land has value even if the building is old or has (for example) an asbestos problem and needs to be torn down. With a ship, the value could not only be zero but negative because there will be cash outlays associated with getting rid of the ship.

(2) Urban Commons LLC seems to be on the hook for these costs BUT does Urban Commons have the financial resources (in a worst case) to pay ? If not, the Trust will (presumably) end up being on the hook and there will be cash outlays which will reduce or obliterate the DPS. 

Hence I believe that the UOB arguments that :

(1) the share price is already at a discount to adjusted NAV when you strip out the Queen Mary and therefore it is attractive and 
(2) the adjusted DPS yield after stripping out the Queen Mary contribution is still attractive

are flawed. If the the Trust ends up being on the hook for additional cash expenditure, then the discount to the adjusted NAV (1) could disappear and the adjusted DPS could either be reduced or disappear for a number of years until the Queen Mary issue has been sorted out.

IMO the above is just a worst case scenario that I am not suggesting will happen. Hopefully, there was enough due diligence before the IPO so that any additional Queen Mary costs will be within Urban Common's ability to absorb. My point is just that this situation is more complex than dealing with a piece of real estate and hence a substantial margin of safety will be required. The fact that two insiders made sales at prices very much below the IPO price is concerning. They may have had liquidity needs, forcing them to sell shares or they may understand the situation better than we do. 

NOT VESTED BUT KEEPING A CLOSE EYE.

[cfa]

Clarification on The Edge Singapore’s Article

Eagle Hospitality REIT Management Pte. Ltd., as manager (the “REIT Manager”) of Eagle Hospitality Real Estate Investment Trust (“EH-REIT”), and Eagle Hospitality Business Trust Management Pte. Ltd., as trustee-manager (the “Trustee-Manager”, collectively with the REIT Manager, the “Managers”) of Eagle Hospitality Business Trust (“EH-BT”) would like to make certain clarifications regarding The Queen Mary asset.

The REIT Manager refers to the article dated 23 October 2019 entitled “Eagle Hospitality Trust could get wings clipped as key asset The Queen Mary sinks into disrepair” by The Edge Singapore and related articles. The Edge Singapore article refers to a series of reports and a letter (the “Letter”) from the City of Long Beach (the “City”) to Urban Commons, LLC (“UC”), the sponsor of Eagle Hospitality Trust, stating that it has failed to meet obligations under The Queen Mary ground lease to make certain repairs required under the ground lease. When the REIT Manager became aware of the Letter, it immediately communicated with UC to seek clarifications on the Letter.

UC has confirmed to the REIT Manager that they are not in default on The Queen Mary ground lease and that The Queen Mary remains safe and structurally sound. UC has also informed the REIT Manager that they are preparing a response, which will be imminently released to the City addressing items referenced in the Letter. The response will include specific maintenance items that have already been completed, are underway and planned in the future for the long-term preservation of the ship.

More details in https://links.sgx.com/FileOpen/EHT-Clari...eID=582806

Mr Market is not happy with the Queen Mary issue, Eagle dive down ~10% to 58c.

Is this a fallen angel (Eagle)?

(Not vested)

Good read ... https://financialhorse.com/eagle-hospita...e-13-drop/

But to put things in perspective, UOB came out with a really nice report this morning ( https://research.sginvestors.io/2019/10/eagle-hospitality-trust-uob-kay-hian-research-2019-10-25.html ) that is well worth the read.

Based on UOB’s numbers, it says that even if Queen Mary is completely written down to zero, it’s FY2020F DPU will drop to 5.12 cents, and NAV drops to 69 cents.

Using the current price of 56 cents,  that works out to a 9.1% yield and a 19% discount to book, assuming Queen Mary is completely written down.

(vested now)

The UOB argument is similar to what caused my interest in this stock : currently, the share price implies that Queen Mary is worthless. That is definitely something that should pique our interest. However, the flaws in UOB's argument are :

(1) Even if Queen Mary is valued at zero, in a worst case scenario there could still be a substantial cash outlay to ensure that it doesn't sink/ make it safe to use as a floating hotel. If it does sink, someone will be on the hook to salvage it, transport it somewhere for disposal (ie cutting it into pieces) and paying someone to effect this disposal. In other words, although the Trust treats this as a piece of real estate, it is very different. With a building, you will normally be able to sell it because the land has value even if the building is old or has (for example) an asbestos problem and needs to be torn down. With a ship, the value could not only be zero but negative because there will be cash outlays associated with getting rid of the ship.

(2) Urban Commons LLC seems to be on the hook for these costs BUT does Urban Commons have the financial resources (in a worst case) to pay ? If not, the Trust will (presumably) end up being on the hook and there will be cash outlays which will reduce or obliterate the DPS. 

Hence I believe that the UOB arguments that :

(1) the share price is already at a discount to adjusted NAV when you strip out the Queen Mary and therefore it is attractive and 
(2) the adjusted DPS yield after stripping out the Queen Mary contribution is still attractive

are flawed. If the the Trust ends up being on the hook for additional cash expenditure, then the discount to the adjusted NAV (1) could disappear and the adjusted DPS could either be reduced or disappear for a number of years until the Queen Mary issue has been sorted out.

IMO the above is just a worst case scenario that I am not suggesting will happen. Hopefully, there was enough due diligence before the IPO so that any additional Queen Mary costs will be within Urban Common's ability to absorb. My point is just that this situation is more complex than dealing with a piece of real estate and hence a substantial margin of safety will be required. The fact that two insiders made sales at prices very much below the IPO price is concerning. They may have had liquidity needs, forcing them to sell shares or they may understand the situation better than we do. 

NOT VESTED BUT KEEPING A CLOSE EYE.

Thought worst case scenario , let the City repossess  the ship . Is the total repair of the ship of more than 250m a legal obligation by UC or Eagle HT ?

[wonghw12]

If you see one cockroach (QM), what is the assurance that there will be no further cockroaches?