Tuesday, June 22, 2021

Emirates REIT Withdraws Plan To Offer $400 Million Sukuk

Emirates REIT has pulled a plan to exchange a $400 million sukuk for new paper, after failing to attract enough votes to push it through.

Equitativa, the manager of the real estate investment trust said in a statement that 57 percent of investors had voted in favor of its proposal, which fell short of the 75 percent needed.

The UAE’s largest shariah-compliant real estate investment trust had offered sukuk holders the option of exchanging their unsecured notes for a secured, but longer-dated alternative. The existing 5.125 percent profit rate would have been maintained for the new secured sukuk. While the existing paper matures in 2022, the new instrument would have extended to 2024.

But a group of investors including Dubai’s Shuaa Capital came out in forceful opposition to the plan and called on it to cut its management fees, instead.

“I believe the company proactively and voluntarily put forward a straightforward transaction which was fairly and explicitly designed to enhance the tradeability of the sukuk,” said Arun Reddy, managing director at investment bank Houlihan Lokey, an adviser to Emirates REIT. “We will continue to reflect on feedback from the market and work with the company with the aim of addressing the structural issues we observe in the sukuk and equity instruments within the capital structure.

Emirates REIT said that contrary to recent market speculation, there has been no event of default or any dissolution event with its debt.

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