Bond Market News

Following news of Emirates REIT facing demand for better governance and transparency from its Ad Hoc Group of debt holders, the REIT’s debt restructuring plan failed to pass as it did not secure the minimum of 75% votes. The debt restructuring proposal was for a $400mn sukuk involving an extended maturity by two years to 2024. In its statement on Monday, Emirates REIT declared that it “will continue to work on enhancing the capital structure for the benefit of all equity and debt holders”. Eleven institutional investors, such as Aberdeen Standard Investments were campaigning to scrap the debt restructuring proposal due to their concerns about Emirates REIT’s lack of transparency. Some of the creditors, represented by Rothschild, claimed that Equitativa, the REIT’s manager did not provide a liquidity profile, an explanation for whether Emirates REIT can make this month’s coupon payment or a reason for the ongoing probe. The REIT’s disclosure levels are “basic”, said Ahmad Alanani, CEO of Sancta Capital, another creditor.

Despite this, Equitativa said they were currently cooperating with the Dubai Financial Services Authority on the probe. Arun Reddy, MD at Houlihan Lokey, an advisor to Emirates REIT said, “the company proactively and voluntarily put forward a straightforward transaction” to enhance the attractiveness of the sukuk. They are currently helping the Dubai-based REIT improve its balance sheet, including through a prospective delisting from Nasdaq Dubai. Emirates REIT said that it got a clear majority of votes yesterday (57%) and would not default on its debt. Their portfolio, with residential, commercial and educational assets, is worth $690mn. The coupon payment due this month amounts to $10.2mn, which the company declared it can pay. The next coupon payment is due in December.

Emirates REIT’s 5.12% 2022s are down 0.99, currently trading at 69 cents on the dollar and yielding 32.84%.

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