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Dubai’s Sobha Realty plans $300m debut sukuk  

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The US market will offer the company a $10-billion growth opportunity over the next decade, said PNC Menon, chairman of Sobha Realty

Real estate developer Sobha Realty is set to raise $300 million through a debut sale of Islamic bonds, a bank document showed.

The five-year sukuk, non-callable for three years, launched at a yield of 8.75 percent, the lower end of initial guidance earlier on Monday of 8.75-8.875 percent, after drawing final orders of more than $525 million, the document from one of the arranging banks said.

Demand excluded interest from joint lead managers, and earlier peaked at more than $600 million.

Dubai Islamic Bank, Emirates NBD Capital, Mashreq and Standard Chartered are joint global coordinators, and Sharjah Islamic Bank joins them as joint lead manager.

Sobha Realty is mainly active in Dubai’s real estate market, where it had an eight percent market share in the first quarter, according to a presentation on its website.

Dubai’s property sector has been booming since it began an early post-Covid recovery as the city raced to reopen. It was further buoyed by an influx of Russians following the war in Ukraine, as well as people fleeing cost of living crises in other places.

Sobha Realty reported sales of AED10.82 billion and revenues of AED5.55 billion last year, up from AED4.38 billion and AED3.17 billion, respectively in 2021.

As of March 30, the firm had AED180 million ($49.01 million) of debt maturing this year, AED171 million next year, AED1.34 billion due in 2025 and AED106 million due in 2026, the presentation showed.

Its net debt to operating Ebitda ratio was 0.9 in 2022 from 3.3 in 2021 and 13.5 in 2020.

The company was founded by its chair PNC Menon in 1976 as an interior design business in Oman and has developments in the UAE, Oman, Bahrain, Brunei and India, according to its website.

Menon and other family members are majority owners of Sobha Ltd, a Mumbai-listed business.