- Arada Developments LLC completes $400 million Sukuk issuance, under its $1 billion Sukuk programme, listed on London Stock Exchange and Nasdaq Dubai.
- The proceeds are to be used for managing existing funding, corporate purposes, and supporting development at existing projects.
- Strong investor demand with a subscription order book of $1.45 billion, reflecting confidence in Arada’s track record and growth narrative.
- Geographically diversified investor interests from Europe, Middle East, and Asia, including institutional investors, fund managers, HNWIs, and banks.
- Joint Global Coordinators and Lead Managers facilitate successful issuance, ensuring smooth execution by a consortium of banks and financial institutions.
Arada Developments LLC (Arada), a company rated B1 by Moody’s and B+ by Fitch, has successfully completed its second public financing deal by issuing a $400 million Sukuk.
This milestone is the first issuance under Arada’s newly established $1 billion Sukuk programme and has been listed on both the London Stock Exchange and Nasdaq Dubai.
Details of the Sukuk Issuance
The five-year fixed-rate RegS Sukuk issuance, rated BB- by Fitch and B1 by Moody’s, was priced at par with a coupon of 8.000%.
This was within the initial guidance area of 8.675%, resulting in a spread of 355 basis points over US Treasuries.
Notably, this issuance achieved one of the highest price tightenings by a real estate issuer from the GCC, with a spread more than 150 basis points inside the previously priced debut Sukuk.
Utilisation of Proceeds
The proceeds from this Sukuk will be strategically used for managing existing bilateral funding, general corporate purposes, and supporting development at Arada’s existing projects.
This financial move is set to strengthen Arada’s position and facilitate the continued growth and expansion of its ambitious projects.
Strong Investor Demand
The Sukuk issuance witnessed strong demand from both regional and international investors, amassing a subscription order book of $1.45 billion, which is 3.5 times the offer size.
This significant interest highlights the confidence investors have in Arada’s stable track record, good governance, and compelling growth narrative.
Geographical Diversification and Investor Profile
Investor interest was geographically diversified, attracting investments from Europe, the Middle East, and Asia.
The investor profile for this issuance included institutional investors, fund managers, High Net Worth Individuals (HNWIs), and banks.
This diversity underscores Arada’s broad appeal and the widespread confidence in its financial stability and future prospects.
Statements from Leadership
Prince Khaled bin Alwaleed bin Talal, Vice Chairman of Arada, expressed satisfaction with the successful closure of their second Sukuk issuance.
He stated that he is pleased to have enjoyed a successful return to the market with the closure of their second Sukuk.
He emphasized that this landmark issuance once again demonstrates the strong level of interest from institutional investors around the world in Arada’s stable track record, good governance, and compelling growth story.
Role of Joint Global Coordinators and Lead Managers
The successful issuance was facilitated by Joint Global Coordinators Abu Dhabi Commercial Bank, Dubai Islamic Bank, Emirates NBD Capital, and Standard Chartered Bank.
Additionally, Arab Bank, Kamco Invest, Mashreq, RAK Bank, Sharjah Islamic Bank, and Warba Bank acted as Joint Lead Managers and Bookrunners, ensuring the smooth execution of the Sukuk issuance.
Arada’s Track Record and Future Prospects
Since its inception in 2017, Arada has launched six successful projects in Sharjah and Dubai, with a combined sales value of AED 60 billion.
These projects include Sharjah’s largest mixed-use megaproject, Aljada, the UAE’s first forested community, Masaar, and the ultra-luxury Armani Beach Residences at Palm Jumeirah.
In 2023, Arada announced a remarkable 100% increase in the total value of property sold, reaching AED 7.02 billion compared to the previous year.
Arada has sold 14,000 units to date valued at over AED 17 billion, with more than 9,000 units completed.
Overall, Arada’s successful $400 million Sukuk issuance marks a significant step in its growth trajectory, providing the necessary funds to manage existing commitments and fuel further development.
The strong investor interest and the strategic use of proceeds highlight Arada’s robust financial health and promising future in the real estate market.
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