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Eagle Hospitality Trust: In danger of extinction?

Friday, March 20, 2020

AK likes buying things on the cheap.

What is cheap?

If we can easily afford something, is it cheap?

Well, it simply means that it is affordable.

It might not be cheap.

Cheap to me means value for money.

Affordability and value for money.

They are not the same thing.

For a refresher, read this blog:
Affordability and Value For Money.

So, AK likes buying things which are value for money.

If I can tell something is definitely value for money, I will buy some and, sometimes, I will buy a lot of it.

This is the same for anything in life whether it is for consumption (especially if it is a need) or for investment.

"Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down." - Warren Buffett

Good old Warren Buffett.

Now, I bolded one word in that quotation.

The word is "quality".

When Eagle Hospitality Trust's unit price crashed last year, many readers as well as some friends of mine thought I would be interested in buying.

After all, many respectable financial bloggers also invested in the Trust then.

Many people thought Mr. Market was overly pessimistic on Eagle Hospitality Trust.

Well, AK is growing older and as he grows older, he grows more timid.

AK wasn't pessimistic about Eagle Hospitality Trust.

AK was afraid, very afraid.

I thought Eagle Hospitality Trust was a risky investment and I didn't feel like taking on more risk in retirement.

What really steered me away from investing in the Trust was the fact that the Trust was imploding as insiders sold at ridiculously low prices, willing to take hefty losses in the process.

This is something that is still happening!

In their latest announcement, the manager of Eagle Hospitality Trust said that "the Security Price meaningfully under-represents the underlying value of EHT’s portfolio."

See recent announcement #4 at the end of this blog.

If that's the case, perhaps, insiders should be buying more or maybe make an offer to take the Trust private.

Why isn't this happening?

Why, indeed, is the opposite, more or less, happening instead?

Why is the manager thinking of an asset sale now?

Wouldn't this be a really bad time to be selling their hotels?

It is basically going to be a fire sale.

In my first blog on Eagle Hospitality Trust, I said:

"Insiders probably know something retail investors or outsiders don't.

"If Eagle Hospitality Trust is a good investment for income, after a huge decline in unit price, insiders should be buying more.

"Even if they don't buy more, they should be holding on to their investments.

"They should not be selling."

It isn't rocket science.

It is common sense.

See related post #1.

My series of blogs on Eagle Hospitality Trust seems to have done something good as a reader who wrote to me late last year just told me that he cut losses after reading my blog in reply to his plight.

See related post #3.

He wrote and told me this after the trading halt in Eagle Hospitality Trust was announced.

He might have lost a big sum of money but in exchange, now, he has peace of mind.



"Never risk what we have and need for what we don't have and don't need." - Warren Buffett

Eagle Hospitality Trust looks like it could be going extinct.

If we cannot trust it, we cannot invest in it.

When in doubt, it is better to stay out.

See related posts and recent announcements at the end of this blog to form your own conclusion.

AK is just talking to himself, as usual.

Related posts:
1. Is Eagle Hospitality Trust worth it?
2. Eagle Hospitality Trust: Financial engineering.
3. Eagle Hospitality Trust: His plight.

Some recent announcements:
1. Eagle Hospitality Trust: Resignation of CFO.
2. Eagle Hospitality Trust: Cessation of Substantial Shareholder.
3. Eagle Hospitality Trust: Resignation of Independent Director.
4. Eagle Hospitality Trust: Business Strategic Review and Update.


laurence said...

AK sings beautifully like a bird.......... chirp, chirp, chirp.......
Eagles, on the other hand, can't sing even if their lives depend on it. Lol.

WTK said...

Hi AK,

My take is to spread the eggs in many baskets and focus on the personal interest. Having the peace of mind is the way to go.


AK71 said...

Hi Laurence,

Oh, you don't want to hear me sing.

I am tone deaf. :p

AK71 said...


Good on you. :)

Cory said...

Good logic call on this one. I avoided Eagle totally despite the fall earlier. Make no sense for insiders to sell unless .....

The Dreamzola Traveller said...

Never really like those 'Rojak' type of Reit that packaged 'Chapalang' parcels together as one.
I would rather pay more buy quality Reit that let me sleep snoring away without worry at night.
zzzzzzz .....

Bananamint said...

Hello AK,

I followed you on Twitch, but havent seen you online :D When do you usually stream :D

AK71 said...

Hi Cory,

It is all very odd behavior, really.

The massive continual selling by insiders at what seemed like ridiculously low prices caused the implosion not only because of the direct downward pressure.

It also caused Mr. Market to suffer a big loss of confidence.

Surely, they must know this.

AK71 said...


I only like rojak when it is food on the table. :p

AK71 said...

Hi Bananamint,

Hey, thanks for following me on Twitch.

I don't have a schedule and only stream when I have a better ping in game.

When I stream, my game becomes laggy.

The last time I streamed was an evening last week.

Since you are following me, you will be notified when I am streaming.

No worries. :)

AK71 said...

Hi Bananamint,

I just ended a one hour thirty minutes stream on Twitch.

Hope you saw that. ;p

Short stream.

Going to spend the rest of my day with family.

Till the next stream, wash our hands more often and stay safe. :)

WTK said...

Hi AK,

My take is that there are many circumstances and scenario in term of the actions made by the so-called insiders/stakeholder of the listed companies. There is no way in which the retail investors (like you and me) are able to decipher the true purpose of their sales and buying of the stock counters.

Having said the above assessments, I am of view that it will be more prudent to limit the amount of the investment (to a certain amount) per counter so that one will not be heavily affected in the event if the counter goes down under for some unknown reasons. I still maintain the approach of buying and holding for the dividends. You may have different approach.

To each of our owns as long as our respective strategies benefits us.


WK888 said...

First Reit consider junk now? Would you consider to go back into it since the price has dropped substantially?

AK71 said...


Good on you. :)

AK71 said...

Hi WK888,

All investments are good at the right price. ;)

I cannot remember exactly but when I looked at it many moons ago, I thought 80% of their income could be at risk.

As their Master Leases come up for renewal, hefty negative rental reversions are likely.

So, a corresponding drop in unit price from the time I sold could make it attractive again.

I just looked up the blog and, wow, time flies.

Sold First REIT...

huiteen said...

Hello AK , any thought about centurion ? Since they were also not spared from the stock diarrhoea effect ...

AK71 said...

Hi huiteen,

I still like Centurion and I remain invested.

Centurion is still cheap...

Of course, cheap can get cheaper.

Unknown said...


So glad Huiteen brought up Centurion. There has been persistent insider buying since the start of March, on a daily basis the last week!

May I know if you have been nibbling too?


AK71 said...

Hi Elaine,

Centurion is a good investment for income and a lower price means better value for money.

What I do isn't important. ;)

If you are buying, just remember that cheap can get cheaper.

So, don't throw in everything including the kitchen sink. ;p

SgFire said...


When do we now the lowest ?
It's bottomless this way. I took some aims at this price. Nice or not ?

AK71 said...

Hi SgFire,

Nice or not?

I also don't know. ;p

Time will tell. :)

AK71 said...

Trading in Eagle Hospitality Trust has been suspended.

Request For Trading Suspension.

"Facilities Agreement and Notice of Default and Acceleration Issued

"Against the above background and backdrop, the Managers wish to further update Stapled Securityholders on recent developments in respect of the syndicated credit agreement dated 16 May 2019 (the "Facilities Agreement") entered into by EH-REIT, through certain of its subsidiaries (collectively, the "Borrowers"), with a syndicate of lenders (the "Lenders") in respect of term loan facilities and/or a revolving credit facility, of which, US$341 million have been borrowed to date (the “Loan”).

"On 20 March 2020, the Managers received a notice of default and acceleration (the "Notice") in relation to the Facilities Agreement issued on behalf of Bank of America, N.A., as the administrative agent for the Lenders (the "Administrative Agent") under the Facilities Agreement.

"Based on the Notice, an event of default has occurred under the Facilities Agreement, due to the Master Lessees’ non-payment of rent under the MLAs in respect of certain properties in EHT's portfolio. For the avoidance of doubt, as at the time of issuance of the Notice, EHT itself has been meeting its own regularlyscheduled debt service obligations on the Loan to the Lenders.

"The Notice further states that as a result of such event of default, the Administrative Agent, on behalf of the Lenders, is entitled to and is exercising its rights and remedies under the Facilities Agreement, including the right to accelerate the entirety of the Loan as a result of which a principal amount of US$341 million was declared to have become immediately due and owing.

"In light of the Notice, the Managers will not be able to draw on the SDs as planned and as referred to above."

laurence said...

Dead eagle that couldn't sing "cheap, cheap, cheap" even when it's life depended on it..........

Eagle Hospitality Trust gets notice of default on US$341m loan, delays distribution
TUE, MAR 24, 2020 - 10:37 AM

EAGLE Hospitality Trust’s (EHT) managers are delaying the distribution to stapled security holders, after having received a notice of default and acceleration on a syndicated loan of which US$341 million have been borrowed.

In a bourse filing on Tuesday, the managers disclosed that they received the notice on March 20, issued on behalf of Bank of America, the administrative agent for the syndicate of lenders.

On behalf of the lenders, Bank of America exercised its right to accelerate the entirety of the loan. This means that the principal amount of US$341 million was declared to have become immediately due and owing, the managers said.

Stapled security holders will also not receive the distribution of 3.478 US cents per security on the previously announced payment date of March 30, 2020. The distribution is for the period from EHT’s listing date of May 24, 2019 to Dec 31, 2019.

This is because EH-Reit is now restricted from paying out the distribution, following the acceleration of the loan.

The managers have deferred any action to pay the funds to The Central Depository for settlement of the distribution, pending further discussions with the lenders and pending overall assessment of the financial implications of the notice of default and acceleration.

Eagle Hospitality Trust gets notice of default on US$341m loan, delays distribution

laurence said...

The Eagle that couldn't sing "cheap, cheap, cheap" even when it's very life depended on it......R.I.P.

D said...

Hi AK,

I understand you are vested in I-reit Global. Can you comment on its leases and if there the risk on defaults from it tenants?

One of the insider of I-reit had also sold down recently. While there is of course other reasons for his sales, do you see or smell any worrying sign?

Many thanks

AK71 said...

Hi Laurence,

It is all very tragic but I feel that the writing was on the wall, really.

AK71 said...

Hi D,

Deutsche Telekom and Europe’s largest pension fund, Deutsche Rentenversicherung (DRV) account for about 77% of IREIT Global's rental income.

Even if all the other tenants go bust, these two won't.

I am very simple minded and use this as the worst case scenario. ;)

As for insider selling, Mr. Tong has been paring down his stakes in many S-REITs he is invested in and not just in IREIT Global alone.

If insider selling in IREIT Global is similar to that in Eagle Hospitality Trust, then, we scream in terror and run for the hills. ;p

3Q 2019 passive income: IREIT-Global.

Focus said...

Super AK

your analysis was right


Focus said...

Super AK

your analysis was right


AK71 said...

Hi Focus,

It was an incomplete analysis, like I said in an earlier blog.

Anyhow talking to myself only lah. ;)

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