A group of international lenders is fighting for greater transparency and management change in Dubai’s major real estate investment accreditation ahead of a fragile vote on its restructuring plans on Monday, marking a rare case of investor activity on the platform.
The Emirates REIT, the largest Shariah-compliant Reit in the United Arab Emirates, is facing a series of reprisals as it seeks to convert a $ 400 million Islamic bond or sukuk that matures in December 2022. A payment of $ 10.2 million is due later this month. ,
The dispute is another challenge for the Gulf trade hub as the UAE seeks to clear its reputation amid several financial scandals, including the collapse of a UK-based hospital operator in Abu Dhabi. NMC: մասն Private equity firm operating in emerging markets in Dubai Abraham,
Emirates REIT described the restructuring as a “direct և voluntary change և extension” transaction. “, designed taking into account the interests of the beekeepers.” The vehicle, listed on the Nasdaq Dubai, said it was confident of securing the agreement of 75% of bondholders, which is required by June 7.
But a group of investors calling themselves the Ad Hoc Group are calling for better governance of Reit manager Equitativa as a condition for agreeing a restructuring. Equitativa is owned by Sylvain Viejot and his wife, Maggie Muke, who are respectively the CEO and CEO of Emirates REIT.
Ad Hoc members include international asset managers such as Scotland’s Aberdeen Standard Investments and Switzerland’s Vontobel. Both asset managers declined to comment.
The group, which says its members owe 40 percent of the debt, is urging the manager to reduce what it considers “excessive” management fees and offer investors a better restructuring package.
“The Ad Hoc Group is frustrated with a company that refuses to deal with significant creditors who have legitimate concerns, demanding transparency and improved governance,” he said. “The group reserves its options if its grievances are not considered.”
In response, the Equitativa spokesman said that Reit had a “solid corporate governance framework” with five separate boards, with many independent directors, that its fees were “in line with those in the industry”.
The company, which advised Julihan Locke, added that his reshuffle was fair. It would replace the existing insecure oyster with a new tool maturing in 2024, which was valued at $ 280 million in assets.
Last year, a group of shareholders, some of the individual bondholders, wrote to the regulator of Reit to raise concerns about whether it was overestimating its portfolio to raise fees.
The Dubai Financial Services Authority told the Financial Times that it would take appropriate action if it found any evidence of illegality, but declined to comment on an active investigation.
Emirates REIT, which has denied shareholder claims that it was overvalued, said last month it would cut its management fees by 20 percent this year after a new appraisal team cut its portfolio value by 19 percent to $ 690 million. The end of 2020, from $ 855 million in the third quarter of last year. The company attributed the decline to a coronavirus impact on Dubai’s property sector.
The reverse bonds recommended by Rothschild call on Emirates Reit to disclose these external valuation reports, as they argue that the decline is unlikely to be solely due to Covid-19.
Against the backdrop of the restructuring offer, Fitch downgraded the Emirates Reit to its lowest rating before default, but the rating agency said it had enough liquidity to pay for the June coupon.
However, a representative of the group of bondholders said that he believes that based on cash flow forecasts, the company may not be able to make the December payment. Equitativa says it is suitable for its liquidity position.