Dubai property fund Emirates REIT says it has resources to meet $400m bond obligations ahead of D-Day

Al Mustaqbal Bridge near DIFC will remain closed on Tuesday, August 25. Photo for illustrative purpose only. Image Credit:

Dubai: The Dubai real estate fund Emirates REIT has sought to reassure its bondholders that it has the cash resources to meet all of its payment obligations. And that it sees no reason to request a cut on the profit rate it had promised bondholders.

The statement from Emirates REIT’s manager Equitativa comes after many investors in its $400 million Sukuk of late 2017 said they had doubts about recently unveiled plans to launch new Sukuk certificates to replace the current ones. Earlier this week, Equitativa said it plans to issue new certificates with a further two-year maturity period. All existing bondholders need to submit their consent or otherwise by evening tomorrow (May 26).

Bondholders are also seeking an update on an investigation into the fund launched by DFSA (Dubai Financial Services Authority), the DIFC regulator.

What’s the plan

If the new Sukuk certificate issue plan succeeds, Emirates REIT could be de-listed from Nasdaq Dubai and then later go in for another listing.

“Both the Sukuk transaction and possible shareholder transaction are being pursued to unlock more value for our stakeholders and address the issues that are creating less liquidity for both our Sukuk holders and shareholders,” Emirates REIT said in a statement.

In a good place

In a bid to address these concerns, Arun Reddy, Managing Director of the consultancy Houlihan Lokey, said: “The company is being proactive to address the structural issues facing sukuk holders, voluntarily issuing the ‘Consent Solicitation Process’, so Sukuk holders can benefit from better tradability and security that they do not have today

“The proposed transaction provides a dollar-for-dollar exchange of unsecured Sukuk to a secured Sukuk with the intention of maintaining an effective profit rate of 5.125 per cent, while extending the maturity by two years.”

Houlihan Lokey is advising Emirates REIT on a turnaround strategy after the fund underperformed in recent years and leading up to a Dh897 million loss for 2020.

“No haircut or discount to the profit rate has been sought from our valued Sukuk holders,” said Emirates REIT in the statement. “The response so far is positive, and we have had good discussions with key institutional Sukuk holders on the transaction and believe they will vote in support of the offer.

“Once we address the Sukuk, we plan to turn our attention to the strategic options available to de-list the Emirates REIT from Nasdaq Dubai, and possibly re-list.”