This landmark transaction marks the first REIT from the MENA region to access the international Sukuk market and obtain a credit rating and the Sukuk represents the tightest credit spread of any debut issue by a Dubai real estate entity.
The success of the Sukuk came on the back of an extensive marketing strategy in Hong Kong, Singapore and London aimed at introducing Emirates REIT’s credit to international investors. Investor demand for the Sukuk was strong, reflecting the REIT’s robust business profile. Investors recognised the REIT’s high quality assets and long term stable cash flows, as well as the management’s ability to implement its business strategy.
The orderbook peaked at $1.1 billion and was 2.5 times oversubscribed by 90 global investors, and saw strong participation from international accounts, with 51 per cent of the issuance being allocated to international investors and 49 per cent to UAE accounts.
In terms of investor type, 48 per cent were banks, 35 per cent were fund managers, 11 per cent were private banks, three per cent hedge funds and two per cent insurance companies and pension funds.
The proceeds will be used to refinance Emirates REIT’s existing debt and replace amortising loans with bullet funding, resulting in an increase of free cash flows by approximately $30 million per year.
“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,” said Sylvain Vieujot, CEO of Equitativa, the REIT Manager.
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.
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