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Emirates REIT closes $400m sukuk

Emirates REIT closes $400m sukuk
The sukuk was rated BB+ and stable by Fitch
Emirates REIT
REIT
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Dubai – Mubasher: Emirates REIT on Wednesday announced the closing of $400 million sukuk with a profit rate of 5.125% per annum,

The profit rate “equivalent to a credit spread of 291 bps over the mid-swap rate,” Emirates REIT said in a statement to Nasdaq Dubai.

The sukuk, rated BB+ and stable by Fitch, represents “the tightest credit spread of any debut issue by a Dubai real estate entity,” Emirates REIT said, indicating that the transaction is the first by MENA-region-based REIT to access the international sukuk market and obtain a credit rating.

The order-book amounted to $1.1 billion (AED 4 billion) and was 2.5 times oversubscribed by 90 global investors.

Around 48% of the REIT’s issue’s investors were banks, while 35% were fund managers, 11% were private banks, 3% were hedge funds, and the remaining 2% were insurance companies and pension funds.

“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,” Emirates REIT stated.

“The successful placement of our inaugural sukuk is a strategic milestone for the next growth-phase of Emirates REIT, [enabling] us to reach our immediate goal of replacing amortizing loans with fixed-rate bullet funding, removes variable interest rate risk and materially increases the REIT’s free cash flow,” commented Sylvain Vieujot, CEO of Equitativa, the REIT manager.

“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,” he added.