The new secured certificates will be secured by a very substantial part of the assets of Emirates REIT. Emirates REIT believes that Sukuk holders will benefit by moving from the current unsecured Sukuk to the new secured Sukuk which includes security over several prominent revenue-generating properties, such as part of Index Tower in DIFC, Office Park, Trident Grand Mall, the 3 Loft Offices buildings, and Building 24.
Arun Reddy, Managing Director of Houlihan Lokey said:
“The proposed transaction is designed to provide a dollar-for-dollar exchange of unsecured Sukuk to a secured Sukuk with the intention of maintaining an effective profit rate of 5.125% and extending the maturity by two years.
The proposal is designed to improve the tradability of the Sukuk and support the trading price for the Sukuk holders. We would expect there to be significantly more secondary interest for the new secured Sukuk vs the existing one.”
The value of the security package today is $280m. The Company has quarterly valuations conducted by independent third-parties valuers. With the recovery of the Dubai real estate market, and the steps taken by Emirates REIT to increase its occupancy rates, we expect the valuation of the security package to register sustained improvement going forward, hence providing added coverage to the Sukuk Holders.
At a time when analysts are predicting the current rally in the Dubai real estate market to continue for the foreseeable future, and tenant demand for fitted-out space increases, this transaction should allow the company to accelerate investments in its properties in order to capture those new demands. We believe this will further contribute to increase the security provided to the Sukuk holders.
Sylvain Vieujot, CEO of Equitativa said:
“This is a voluntary transaction designed to support the Sukuk holders and is the most investor-friendly option we could envision which provides security, over all the properties we could mortgage, to our new Sukuk holders. Further to
the recent announcement of a 20% reduction in the management fee, Equitativa views this transaction as another opportunity to demonstrate our stewardship of the company.”
Sukuk holders are invited to submit their elections by 4pm BST on Wednesday 26th May 2021 to benefit from the 1% early
Documentation Review Fee.