DUBAI- Dubai real estate investment trust ENBD REIT is facing opposition to going private from some shareholders who fear the move could further erode its value, two sources said.

The trust, managed by the asset management unit of Emirates NBD, Dubai's largest bank, has said it plans to delist because of low trading liquidity and a more than 50% discount on its shares versus the net asset value of the fund.

Dubai's property market has been hit by oversupply and sluggish growth in the private sector, which shrank in the United Arab Emirates in January for the first time since 2009. 

The shareholders believe the vehicle's fee structure rewards its managers without taking fully into account the sector's condition, and a delisting would not solve the problem, said the two sources familiar with the matter.

The investors include the UAE's National Bonds, alternative investment firm Sancta Capital and Saudi insurer Tawuniya, as well as Emirati and Saudi family businesses, said one of them.

Their concern illustrates how a slump in the once-booming Dubai real estate sector is pushing investors to ask that business practices be more reflective of the economic slowdown.

REITs manage real estate assets that regularly generate profits, which are distributed to shareholders as dividends.

ENBD REIT - one of the two REITs listed on the Dubai Nasdaq exchange - has a total market value of $105 million, according to Refinitiv data, but its net asset value (NAV) is $246 million.

"Whereas NAV is derived from rental income after considering operating expenses and capex for the upkeep of the assets, market capitalization reflects the true economic value in the hands of the shareholders after the leakage from the REIT’s running expenses and manager fees," Sancta Capital said in an investment document seen by Reuters.

"This leakage has resulted in a structural discount to NAV which will not be resolved with a delisting," it said.

ENBD REIT said in a statement sent to Reuters: "The board and management believe that trading privately would remove the value gap between the publicly traded share price and NAV."

"This would result in the value of shareholdings being reported to shareholders at NAV."

It added it was reviewing its fee structure and would propose alternatives to shareholders soon, potentially improving net income returns.

National Bonds and Tawuniya did not respond to requests for comment.

Emirates REIT , the other Dubai-listed trust, said last month it would withhold interim dividend payments due to uncertainties in the real estate market.

(Additional reporting by Nafisa Elthair; Editing by Jan Harvey) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))