Arada Developments LLC, a real estate company rated B1 by Moody’s and B+ by Fitch, has recently completed its second public financing deal with the issuance of a $400 million sukuk. The sukuk, which is the first under Arada’s newly established $1 billion sukuk programme, has been listed on the London Stock Exchange and the Nasdaq Dubai.
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 per cent. This pricing was inside the initial guidance area of 8.675 per cent and achieved one of the highest price tightenings by a real estate issuer from the GCC. The proceeds of the sukuk will be used for managing existing bilateral funding, general corporate purposes, and supporting development at Arada’s existing projects.
The sukuk issuance garnered strong demand from both regional and international investors, with a subscription order book reaching $1.45 billion, which is 3.5 times the offer size. The joint global coordinators for the sukuk were Abu Dhabi Commercial Bank, Dubai Islamic Bank, Emirates NBD Capital, and Standard Chartered Bank, with several other banks serving as joint lead managers and bookrunners for the issuance.
Since its establishment in 2017, Arada has launched six successful projects in Sharjah and Dubai with a combined sales value of Dh60 billion. These projects include Aljada, Masaar, and Armani Beach Residences at Palm Jumeirah. In 2023, the total value of property sold by Arada increased by 100 percent to Dh7.02 billion, with over 14,000 units sold since inception.
The investor interest in Arada’s sukuk was geographically diversified, with investors from Europe, the Middle East, and Asia participating. The investors included institutional investors, fund managers, High Net Worth Individuals (HNWIs), and banks. Prince Khaled bin Alwaleed bin Talal, vice-chairman of Arada, expressed pleasure at the success of the sukuk issuance and noted the strong interest from institutional investors globally.
Arada’s successful issuance of the $400 million sukuk demonstrates investor confidence in the company’s track record, governance, and growth potential. The listing of the sukuk on major stock exchanges like the London Stock Exchange and the Nasdaq Dubai further solidifies Arada’s position in the market. With a strong pipeline of projects and a growing sales value, Arada is poised for further growth and success in the real estate sector.
