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Emirates REIT proposes $400m sukuk refinancing

The 14 banks have been banned from undertaking dollar transactions but can continue to use Iraqi dinars and other foreign currencies

Emirates REIT said on Monday it was again proposing to its bondholders to refinance its $400 million sukuk due next month, and an ad hoc group of investors who last year opposed a proposed exchange offer said it would support it.

Emirates REIT, a sharia-compliant real estate investment trust, rescinded in June 2021 an offer to holders of its $400 million sukuk issued in 2017 to exchange their notes for new paper after failing to gain the required investor support.

Fitch had downgraded Emirates REIT by several notches after it made the exchange offer.

It is offering sukuk holders, for each $1,000 in face amount of their sukuk, $950 in face amount of new notes and $50 in cash.

The sukuk would mature in December 2024, with a one-year extension option. The notes will pay a profit rate of 9.5 percent a year from the current 5.125 percent and collateral will be given “with assets providing coverage of at least 150 percent of the outstanding amount of the New Secured Certificates”, Emirates REIT said in a statement.

Emirates REIT needs 75 percent of its creditors to consent to the proposal to exchange the outstanding unsecured sukuk with secured ones.

The ad hoc group, which represents about 30 percent of the creditors, found “the terms of the proposed transaction acceptable” and intended to vote in favour of the proposal, it said through Rothschild, its financial adviser. Akin Gump Strauss Hauer & Feld LLP is legal adviser to the group.

The group includes Arkkan Capital Management Limited, Rasmala Investment Bank Limited, GFH Financial Group, Sancta Capital, SC Lowy Primary Investments, Plenisfer Investments, Emirates NBD Asset Management, Shuaa Capital and Saray Capital.

The group said it had been in talks with Emirates REIT for several months ‘to reach agreement on transaction terms that would provide satisfactory structural protections and economic returns for the holders of the new secured certificates’.