July 19, 2020 / 12:31 PM / 18 days ago

Dubai real estate fund considers de-listing amid sector downturn

DUBAI (Reuters) - Emirates REIT REIT.DI, a Dubai-based sharia-compliant real estate investment trust, said on Sunday it was considering de-listing from Nasdaq Dubai .FTDUAE amid a downturn in the United Arab Emirates’ real estate sector and weak equity market conditions.

“It is looking likely that a return to operating as a private REIT, at least temporarily, is in the best interests of the fund and its investors,” the company said in a statement.

It said current market conditions in UAE public equity markets had damaged the share’s performance and led to an “unjustifiably large gap between the fund’s share price and its true value”.

The real estate sector in Dubai, one of the main emirates of the UAE, has been sluggish for years, due to a chronic oversupply of homes coupled with weak economic growth, a problem now exacerbated by the coronavirus crisis.

Emirates REIT, which has a market capitalisation of around $45 million, said “a cyclical downturn in the UAE real estate sector and a challenging operating environment” had contributed to its decision to review its options, including a potential de-listing.

Emirates REIT’s shares were trading at $0.15 on Sunday compared with a net asset value (NAV) per share of $1.57 at the end of 2019.

Earlier on Sunday, Emirates REIT said its manager, Equitativa, was being investigated by the Dubai Financial Services Authority (DFSA) for matters connected to the management of Emirates REIT, specifically on valuation, information and interests and corporate governance.

Emirates REIT said Equitativa intended to cooperate with the investigation.

In a statement to Reuters, DFSA confirmed it was investigating Equitativa with respect to its role as fund manager of Emirates REIT. It said the probe had started on May 24 but did not disclose details of the investigation.

Reporting by Davide Barbuscia and Yousef Saba; Editing by Kevin Liffey

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