Stapled Securityholders are subject to a maximum of 30% withholding tax on income derived from U.S. investments. However, Stapled Securityholders may be exempt from such withholding tax if certain requirements are satisfied.
Other than the Portfolio Interest Exemption Limit, Stapled Securityholders must comply with certain documentation requirements in order to be exempted from withholding tax under the United States Internal Revenue Code of 1986, as amended (the “IRC”), including under the United States Foreign Account Tax Compliance Act (“FATCA”).
Specifically, Stapled Securityholders must establish their status for FATCA purposes and their eligibility for the Portfolio Interest Exemption by providing an applicable IRS Form W-8 or such other certification or other information related to FATCA that is requested from time to time.
Stapled Securityholders must also provide updates of any changes to their status for FATCA purposes including information relating to their name, address, citizenship, personal identification number or tax identification number, tax residencies, and tax status. Such information may be disclosed or reported to the IRS, the Inland Revenue Authority of Singapore or other applicable tax or regulatory authorities for the purpose of compliance with FATCA. If Stapled Securityholders fail to provide or to update relevant information necessary for compliance with U.S. tax withholding requirements, including FATCA, or provide inaccurate, incomplete or false information, amounts payable by Eagle Hospitality Trust to Stapled Securityholders may be subject to deduction or withholding in accordance with U.S. tax law and any intergovernmental agreements.
Restriction on Ownership of Stapled Securities
Distributions will be reduced for Stapled Securityholders who are non-U.S. persons who own 10% or more interest in the Stapled Securities.
Stapled securityholders of Eagle Hospitality Trust (“Eagle HT”) who are non-U.S. persons are not entitled to claim the Portfolio Interest Exemption, which is an exemption from 30% U.S. withholding tax attributable to such Stapled Securityholder’s distributive share of U.S.-sourced interest payments, if (i) such Stapled Securityholder directly or indirectly owns (including constructive ownership, as described below) 10% or more of the outstanding Stapled Securities and/or (ii) such Stapled Securityholder does not meet certain documentation requirements as set out below.
Any non-U.S. person who wishes to hold an interest in the Eagle HT greater than the Portfolio Interest Exemption Limit may do so but will be subject to 30% U.S. withholding tax on their distributive share of U.S.-sourced interest payments. This tax will be remitted by U.S. Corp on their behalf and will accordingly reduce the distributions from the REIT to which such persons would otherwise be entitled.
Any person who acquires or attempts or intends to acquire direct or indirect ownership of Stapled Securities that will or may violate the Portfolio Interest Exemption Limit must give immediate written notice to the Managers at least 15 days prior to a proposed or intended acquisition or, if later, immediately after becoming aware of the acquisition or proposed acquisition. Such person may be requested to provide such other information as may be requested by the Managers in order to determine the effect of such acquisition or proposed acquisition on whether such person can claim the Portfolio Interest Exemption.
The constructive ownership rules generally attribute ownership of stock (i) to individuals from spouses, children, grandchildren and parents (“family attribution”), (ii) to beneficial owners of entities from such entities (“upward attribution”), (iii) to entities from their beneficial owners (“downward attribution”) and (iv) to option holders from options to acquire such stock (“option attribution”). In the case of (i) upward attribution and (ii) downward attribution from a shareholder that owns less than 50 percent of the value of a corporation, the stock attributed is proportional to (i) the beneficial owner’s ownership of the entity and (ii) the shareholder’s ownership interest in the corporation measured by value, respectively. In all other cases of downward attribution, all of the stock owned is attributed down.
All of the attribution rules generally apply simultaneously, except (i) stock constructively owned by an individual through family attribution cannot be subsequently treated as constructively owned by another individual through family attribution, (ii) stock constructively owned through downward attribution cannot be subsequently treated as constructively owned through upward attribution, (iii) stock constructively owned through option attribution cannot be subsequently treated as constructively owned through family, upward or downward attribution, and (iv) if option attribution and family attribution apply to the same stock, the stock is treated as constructively owned through option attribution.
The conditions listed above are for the purposes of general information only and do not constitute formal taxation advice in respect of declaring eligibility status. Stapled Securityholders are urged to consult with their own tax advisors before making such a declaration.
Distributions will be declared in U.S. dollars. Each Stapled Securityholder will receive his distribution in Singapore dollars equivalent of the U.S. dollar distribution declared, unless he elects to receive the relevant distribution in U.S. dollars by submitting a “Distribution Election Notice” by the relevant cut-off date.
For the portion of the distributions to be paid in Singapore dollars, the Manager will make the necessary arrangements to convert the distributions in U.S. dollars into Singapore dollars, at such exchange rate as the Manager may determine, taking into consideration any premium or discount that may be relevant to the cost of exchange.
CDP, the Managers or Eagle Hospitality Trust shall not be liable for any loss arising from the conversion of distributions payable to Stapled Securityholders from U.S. dollars into Singapore dollars. Save for approved depository agents (acting as nominees of their customers), each Stapled Securityholder may elect to receive his entire distribution in Singapore dollars or U.S. dollars and shall not be able to elect to receive distributions in a combination of Singapore dollars and U.S. dollars.