EC World REIT lenders demand the removal of illegal mortgages on 3 properties by 31 January

The REIT’s sponsor reportedly imposed illegal mortgages amounting to $51.1m  on 3 properties.

The lenders of EC World REIT have demanded Forchn Holdings Group remove the illegal mortgages it imposed over Fuzhou E-Commerce, Fuheng Warehouse and Hengde Logistics by 31 January.

In a demand letter issued on 24 January, the lender asked  Forchn Holdings Group, the sponsor of the REIT, to negotiate with the Fuyang Government to have the illegal mortgages discharged and ensure that no similar incident will happen again.

If the sponsor fails to meet the 31 January deadline, lenders said it will “not rule out taking relevant legal action, including but not limited to filing a lawsuit, seizing assets and other measures to protect their rights.”

The lenders underscored that they have a first right of the mortgage over the three properties, and no new mortgages may be created over the properties of EC World REIT without their consent.

“In December 2023, the lenders had discovered through title searches that the illegal mortgages over the relevant properties had been created amounting to approximately RMB 269 million ($51.1m) and that such illegal mortgages were created in connection with the Fuyang Government (富阳政府) in the People’s Republic of China,” the lenders wrote.

“The actions of the sponsor had been carried out without the knowledge of the lenders and such actions constitute a breach of the terms of the ECW Facilities,” the lenders added.