Domestic Bonds

Reigning family-owned Abu Dhabi real estate company selling dollar sukuk

DUBAI, July 5 (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 his ruling family, has hired banks for a first sale of US dollars – in sukuk, or Islamic bonds, according to a document released on Monday.

The company, which has a portfolio that is 90% concentrated in the capital of the United Arab Emirates and the rest in neighboring Dubai, has engaged Emirates NBD Capital (ENBD.DU) and First Abu Dhabi Bank (FAB.AD) as global coordinators .

Abu Dhabi Commercial Bank (ADCB.AD), Dubai Islamic Bank (DISB.DU) and Mashreq (MASB.DU) will join them in organizing investor appeals from Monday, according to the document from one of the banks.

A five-year sukuk sale will follow, subject to market conditions. The proceeds will fund capital spending and acquisitions, S&P Global Ratings said in a report.

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

The bond sale would largely refinance existing loans, two sources with knowledge of the matter said, with one adding that it would likely be around $ 500 million.

The Gulf rarely sees private companies tapping into international debt markets, and one of the sources said the deal would pave the way for new issuers.

“They will come back to the market. This is the first transaction,” the source said, adding that the goal was to follow this first five-year deal with medium and long-term funding going forward.

“Enough of the same,” the source said, referring to a region where sovereigns have made up about half of the volume of issuance over the past two years, although they are expected to represent a smaller share of the market this year. .

The company said in an investor presentation reviewed by Reuters that its “strong relationship with the Abu Dhabi government” gave it priority assistance in obtaining rezoning and planning approvals, as well as demonstrated support and advice. financial and in-kind contributions, as well as other benefits.

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

The real estate market in the United Arab Emirates – an important 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 hamper the growth of the company,” said S&P.

The company’s total debt stood at 2.17 billion dirhams ($ 590.86 million) at the end of 2020, according to the presentation to investors.

($ 1 = 3.6728 UAE dirhams)

Reporting by Yousef Saba; Additional reporting by Hadeel Al Sayegh; Editing by Himani Sarkar and David Evans

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