Eagle Hospitality Trust rebutted Thursday claims in an Edge Singapore article that the Queen Mary, one of its 18 U.S. hospitality properties, has fallen into structural disrepair and could be found in default.
The Queen Mary is a decommissioned ocean liner which has been converted into an upscale hotel moored in Long Beach, California.
The Edge had pointed to reports Long Beach’s economic development director, John Keisler, had sent a letter on 1 October to Taylor Woods, the CEO of Urban Commons, which is the trust’s sponsor, saying it had not met its obligations under the lease to repair the vessel and warning of a potential default by the end of the month.
Eagle Hospitality Trust said once it was aware of the letter, it contacted Urban Commons for clarification.
“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,” the trust said in a filing to SGX.
“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,” the filing said.
The Edge cited comments from city inspector Edward Pribonic, which were published in a Long Beach Post article: “Last month I stated that the ship has never been in a worse condition,” he wrote. “That statement is surpassed by the condition found this month which is even worse.”
The same Long Beach Post article, however, noted Johnny Vallejo, a city property services officer for the Queen Mary, noted that Pribonic’s language tends to be a “little hyperbole,” and that “his writing style is something we’re working on.”
Eagle Hospitality Trust pointed a Long Beach Press Telegram article which cited Keisler as saying the ship was safer now than it was three years ago.
The trust also noted Shane Fitzgerald, a partner at John A. Martin & Associates, or JAMA, the marine engineering company hired by Urban Commons to ensure the vessel’s structural integrity had called the condition “excellent.”
Before the trust’s IPO, US$23.5 million was invested in the Queen Mary, with major life safety and structural projects completed, the statement added.
Eagle Hospitality Trust had requested a trading halt before the market open Thursday; trading in its units will resume Friday.