Emirates REIT, UAE’s largest sharia-compliant REIT, faces demand from debtholders for greater transparency and governance changes ahead of today’s vote on restructuring plans. The Dubai-based REIT plans to restructure a $400mn sukuk maturing in December 2022, with a $10.2mn coupon payment due this month. The REIT assured the restructuring will be executed “with the interests of sukuk holders in mind” and are confident they will get support from 75% of their shareholders. A group of investors known as the “Ad Hoc Group” demand better management from Emirates REIT’s manager, Equitativa. The group believes that Equitativa is drawing excessive management fees and wants a better financial package for the restructuring. The Ad Hoc Group claim that they collectively own 40% of Emirates REIT’s debt and the members include asset managers from Aberdeen Standard Investments and Vontobel of Switzerland. The investors expressed their disdain for the Dubai REIT’s lack of “character and business ethics”. However, Equitativa stated the REIT’s “robust corporate governance framework is in line with industry peers”. The planned restructuring proposal replaces the current sukuk with one maturing in 2024 backed by property valued at $280mn. Last month, Emirates REIT announced a 20% reduction in management fees due to a fall in its portfolio valuation from $855mn to $690mn at the end of 2020, on account of the pandemic. However, many bondholders demand that Emirates REIT disclose these valuation reports, believing the coronavirus outbreak is not the sole cause of the fall in valuation. Additionally, they believe the REIT will be unable to make the coupon payment this month.
Emirates REIT’s 5.125% 2022s are up 0.38, currently trading at 70.375 and yielding 31.22%.
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