Emirates REIT has closed a $400mn 5-year Sukuk with a profit rate of 5.125% per annum.
This transaction marks the first REIT from the MENA region to access the international Sukuk market and obtain a credit rating.
Sylvain Vieujot, CEO of REIT manager Equitativa, said: “The successful placement of our inaugural Sukuk is a strategic milestone for the next growth-phase of Emirates REIT.
“The Sukuk enables us to reach our immediate goal of replacing amortising loans with fixed-rate bullet funding, removes variable interest rate risk and materially increases the REIT’s free cash flow.
“It also gives Emirates REIT a profile in the international debt capital markets and diversifies our funding base.
“The positive reaction from both domestic and international investors to our debut Sukuk is a clear testament to the quality of our assets, and the REIT manager’s portfolio management strategy.”
The Sukuk follows an extensive marketing strategy in Hong Kong, Singapore and London aimed at introducing Emirates REIT’s credit to international investors.
The order book peaked at $1.1bn and was 2.5 times oversubscribed by 90 global investors.
There was strong participation from international accounts, with 51% of the issuance being allocated to international investors and 49% to UAE accounts.
In terms of investor type, 48% were banks, 35% were fund managers, 11% were private banks, 3% hedge funds and 2% insurance companies and pension funds.
The proceeds will be used to refinance Emirates REIT’s existing debt and replace amortizing loans with bullet funding, resulting in an increase of free cash flows by approximately $30mn per year.
Standard Chartered Bank acted as Global Coordinator and Ratings Advisor. The Joint Lead Managers and Bookrunners were Dubai Islamic Bank, Emirates NBD Capital, Standard Chartered Bank and Warba Bank. Clifford Chance acted as counsel to Emirates REIT and Dentons acted as counsel to the managers.
Emirates REIT is a Dubai-based real estate investment trust established to invest in principally income-producing real estate in line with Shari'a principles