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Dubai’s UAE Real Estate Investment Trust halts debt restructuring plan after creditors vote

Dubai’s UAE Real Estate Investment Trust halts debt restructuring plan after creditors vote


After its lenders blocked the debt restructuring plan and raised “serious concerns” about its transparency and governance, a large real estate investment fund in Dubai became the focus of attention.

After a rare investor radical campaign, the Dubai-based UAE Real Estate Investment Trust was forced to withdraw its $400 million sukuk restructuring proposal-which is not common in the conservative Gulf region.

The UAE’s largest Shariah-compliant real estate investment trust (REIT) confirmed on Monday that it had failed to obtain the 75% of the shareholders’ vote required for the restructuring, which included postponing the issuance of bonds. The maturity date is two years to 2024.

“Therefore, the UAE REIT has decided to cancel the voluntary acquisition and will continue to work to improve the capital structure to benefit all equity and debt holders in the REIT,” it said in a statement on Monday.

Commuters drive along Sheikh Zayed Road, passing commercial and residential properties in Dubai, United Arab Emirates.

Christopher Parker | Bloomberg | Getty Images

Compliance with Sharia law means that the relevant funds or trusts are bound by Sharia law and Islamic religious principles, including the prohibition of charging interest for profit, and prohibiting most of the income from alcohol, gambling, pork, pornography, and arms sales.

A victory for activist investors?

On Monday, June 8, 2020, jet skis pass by residential skyscrapers by the water in Dubai Marina District, Dubai, United Arab Emirates.

Christopher Parker | Bloomberg | Getty Images

The UAE Real Estate Investment Trust has required debt holders to exchange their unsecured notes for a secured but longer-term alternative in order to strengthen their balance sheets in Dubai due to the real estate and economic recession caused by the pandemic.

The UAE Real Estate Investment Trust stated that an absolute majority of Islamic bondholders (57%) have voted in favor of its proposal. It also stated that there was no default or any dissolution related to its debt.

The final disclosed value of its residential, commercial and educational asset portfolio was US$690 million. The company said it has the funds to pay shareholders an upcoming dividend this month-worth $10.2 million. The other payment will be due in December.

“The UAE is not immune”



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