Tuesday, May 30, 2023

Abu Dhabi real estate firm, owned by ruling family, in dollar sukuk sale By Reuters


© Reuters.

By Yousef Saba

DUBAI (Reuters) -The Private Department of Sheikh Mohamed Bin Khalid Al Nahyan LLC (PD), a relatively small real estate player in Abu Dhabi owned by members of its ruling family, has hired banks for a debut sale of U.S. dollar-denominated sukuk, or Islamic bonds, a document showed on Monday.

The company, which owns a portfolio that is focused 90% in the United Arab Emirates capital with the rest in neighbouring Dubai, hired Emirates NBD Capital and First Abu Dhabi Bank as global coordinators.

Abu Dhabi Commercial Bank, Dubai Islamic Bank and Mashreq will join them in arranging investor calls starting on Monday, the document from one of the banks showed.

A five-year sukuk sale will follow, subject to market conditions. Proceeds will fund capital expenditure and acquisitions, S&P Global (NYSE:) Ratings said in a report.

The agency has assigned PD a sub-investment grade ‘BB’ long-term issuer rating, constrained by its “limited portfolio size in a fragmented and weak Abu Dhabi real estate market and its high leverage,” but “supported by good asset quality, locational advantage, and strong shareholders.”

The bond sale would largely refinance existing loans, a source familiar with the matter said.

PD’s properties in development are expected to result in revenue growth of between 4% and 5% this year and 25% to 30% in 2022. Its portfolio “will remain small in a regional context” despite the additions and potential acquisitions, S&P said.

The properties market in the United Arab Emirates – a significant component of the country’s gross domestic product – suffered last year amid the coronavirus crisis, with prices in Abu Dhabi and Dubai falling sharply.

“The Abu Dhabi real estate market is at a low point in the cycle, which could dampen the company’s growth,” S&P said.

($1 = 3.6728 UAE dirham)

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