Dubai’s real estate fund weighs debt options amid downturn: sources
Emirates REIT, a Dubai-based sharia-compliant real estate investment trust, is considering buying back some of its roughly $400 million in outstanding Islamic bonds to improve its balance sheet, three sources told Reuters on Tuesday.
The idea is one of a number the company is considering in the face of the economic pressures caused by the coronavirus pandemic, which are weakening an already sluggish property market in Dubai.
The company is also considering refinancing the Islamic bonds, or sukuk, two of the sources said, with one of them adding that talks with local banks had faltered partly because of their exposure to troubled hospital operator NMC Health, which is in restructuring talks with lenders.
Emirates REIT Chief Executive Sylvain Vieujot said a potential sukuk buyback was discussed briefly on a recent earnings call.
“We think our sukuk is at an attractive price at the moment, that’s all we said,” he told Reuters, declining to comment further.
The company did not respond to emailed questions about potential refinancing of the sukuk or buybacks.
The sukuk, maturing in 2022, were trading at less than 60 cents on the dollar on Tuesday with a yield of 27.6 percent, against 6.1 percent at the end of 2019, Refinitiv data showed. They were issued in December 2017 with a 5.125 percent coupon.
Emirates REIT had $48.4 million in cash at the end of 2019, according to a statement on its website. Its shares traded at $0.22 on Tuesday, against a net asset value (NAV) per share of $1.57 at the end of last year.
Real estate investment firms across the region were already grappling with an oversupplied market and sluggish demand.
Dubai real estate investment trust ENBD REIT, managed by the asset-management arm of Emirates NBD, Dubai’s largest bank, considered delisting earlier this year because of low trading liquidity and a large discount on its shares versus the net asset value of the fund.
Saudi-based Jadwa Investment Company this week said that it would suspend management fees for its Jadwa REIT Al Haramain Fund 4332.SE , equal to 1 percent of the fund’s NAV, because of the coronavirus pandemic.
In a separate bourse filing, Jadwa Investment’s Jadwa REIT Saudi Fund 4342.SE said it was reviewing requests from tenants for temporary rent reductions case by case. Some requests have not been accepted and those under review represent 8% of the fund’s total annual revenue, it said.
