Arada to part-fund projects from $400m sukuk

Wam

The real estate developer Arada has raised $400 million through sukuk (Islamic bonds) to part fund its projects across the UAE.

The sukuk order book reached $1.45 billion, 3.5 times oversubscribed, after strong demand from both regional and international investors.

The fundraising is the first issuance under Arada’s newly established $1 billion sukuk programme, the UAE state-run Wam news agency reported.

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The proceeds of the sukuk, which is listed on the London Stock Exchange and Nasdaq Dubai, will also be used to manage existing bilateral funding and general corporate purposes.

The five-year, fixed-rate sukuk issuance was priced at par with an 8 percent coupon for a spread of 355 basis points over US Treasuries.

The trade achieved one of the highest price tightenings by a real estate developer from the GCC.

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Investor interest in the sukuk was geographically diverse, with participation from Europe, the Middle East and Asia. The investors included institutional investors, fund managers, high-net-worth individuals and banks.

Sukuk are sharia-compliant bonds developed as an alternative to conventional bonds, which are not considered permissible by many Muslims as they pay interest and may finance businesses involved in activities not allowed under Islamic law.

Since its launch in 2017, Arada has launched six projects in Sharjah and Dubai, with a combined sales value of AED60 billion ($16.3 billion). It has sold 14,000 units until now, valued at more than AED17 billion. More than 9,000 units have been completed.

The developer’s property sales value doubled year on year in 2023 to AED7 billion.