EC World REIT takes legal action against sponsor amidst mortgage dispute

Its sponsor failed to discharge the alleged "illegal" mortgages imposed in its Fuyang properties.

EC World REIT Group is initiating legal action against two entities of the group after their failure to remove alleged illegal mortgages imposed on its Fuyang properties.

The sponsors, Hangzhou Fuyang Futoufa Zhenfu Equity Investment LLP and Zhejiang Fuyue Finance Lease Co., are said to be linked to the Fuyang government involved in the mortgages in question.

In an SGX filing, EC World REIT Group said that it arrived at the decision following discussions with its lenders and its trustee DBS Trustee Limited.

Earlier in January, EC World REIT Group demanded Forchn Holdings Group Co. to discharge the mortgages imposed on Fuzhou E-Commerce, Fuheng Warehouse and Hengde Logistics by 31 January. 

As of 18 January, only the mortgages imposed on Hengde Logistics have been discharged.

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EC World REIT said it will provide unitholders with a further update when there are material developments, and cautioned unitholders that there is no assurance that any discussions or prospects will be successfully concluded.

“The manager wishes to highlight that there is no certainty or assurance as at the date of this announcement that any discussion or prospects will be successfully concluded or any definitive agreements in relation to any transactions will be entered into,” EC World REIT stated in its SGX filing.

The REIT further advised unitholders to consult their stockbrokers, bank managers, solicitors or other professional advisors if they have any doubt about the actions that they should take.