1. Let's call a spade a spade and not mince our words. This is not just a case of the Sponsor being negligent. This was done knowingly in order to secure a loan from the provincial government. In my mind, this is clearly a case of fraud being committed.
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| Extraction from the Association of Certified Fraud Examiners |
2. This entire fiasco also brings us to the point on why the management of EC World REIT has only now then demanded that Yuntong Property Management Co., Ltd, the property manager of EC World REIT’s properties and a wholly-owned subsidiary of the Sponsor, handover all the title deeds of EC World REIT’s properties to EC World REIT’s Onshore Facility Agent. It is either they are too slow to react or they are incompetent. This is absolutely horrendous. It is akin to waking up one morning and then finding out suddenly that your fully-paid property owned by yourself has been mortgaged by your relative whom you passed the title deed to for safe-keeping. In the first place, why would you pass your title-deed to your relative when it should have been all -along kept within one's control?
3. Also, how much more hidden can of worms is being concealed by EC World REIT?
4. EC World REIT is strangely giving me a Deja Vu vibes and reminded me of Eagle Hospitality Trust. My gut feel is that more bad news is going to be released by EC World REIT. In Eagle case, once fraud is uncovered, this means that the entire management at the top is dubious.
5. Personally to me, one can no longer trust the financials once there are integrity issue from the sponsor as these unfortunately also cast aspersions also over the current management team.
6. The fact that the Sponsor is so desperate to make false representation to get the loan also means that they are in great financial distress. The Sponsor can't even save its own skin. So how will they be able to save EC World REIT? Already, the Sponsor commitment to buy-over 2 warehouses belonging to EC World REIT has fallen apart.
7. The sad thing is that for existing investors, nothing much can be done as the REIT has already been suspended from trading. One can no longer exit their investment by selling them to other investors who are more willing to take up the risk. As per the case of Eagle Hospitality Trust, there is now a high likelihood that existing investors may end up with zero value due to fire sales of properties at the worst possible time.
