Gulf Related signs Dh2.3bn loan with ADCB to build Al Maryah Central in Abu Dhabi

Scheduled to open in March 2018, the 2.3 million square foot mall will feature the first Macy’s outside of the United States.

A rendering of Al Maryah Central which is set to be completed in 2018. Courtesy Gulf Related

Gulf Related has struck a Dh2.3 billion financing deal to help fund the development of the Al Maryah Central project in the capital.

Gulf Related said the deal with Abu Dhabi Commercial Bank (ADCB) was the biggest fundraising that it – or its shareholders Gulf Capital and Related Real Estate – had participated in regionally.

It said the deal highlighted the “strong reception” for the US$1.05bn development — the first phase of which is due to open in March 2018.

Karim El Solh, co-managing partner of Gulf Related and the chief executive of Gulf Capital, said that more than one-third of the total leasable space at Al Maryah Central had been let before the contractor Brookfield Multiplex started work on site last month. It has two anchor tenants – the first Macy’s store outside the US and the first Bloomingdale’s store in Abu Dhabi – and a deal in place with Al Tayer Group to open 20 stores.

Mr El Solh described the funding deal with ADCB as “the last piece of the puzzle” required to take the project forward.

The bank finance from ADCB represents 65 per cent of the development costs. The remaining 35 per cent has been committed through equity and mezzanine finance – all of which has already been secured, said Mr El Solh.

He declined to discuss the terms of the loan but said it was “the most competitive in terms of tenure, structure, drawdown and terms”.

“They led the whole financing without having to syndicate it or bring other parties,” he said. “From a bigger picture, I think that markets are going through certain volatility. We feel very gratified that ADCB came through. It’s such a big financing for a unique project that will position Al Maryah Island as an urban heart for Abu Dhabi.”

The funding covers phase one of the project, which will involve 2.3 million of a total of 3.1 million square feet being developed. This will include a mall with more than 400 stores, 145 restaurants and cafes and a 20-screen cinema. It will also be linked directly to The Galleria shopping centre that was developed by Gulf Related and the Abu Dhabi Global Market Square. The remainder of the project, including apartments and a hotel, will be developed as part of a future phase.

Last week, Standard & Poor’s predicted “a gradual deterioration in the liquidity available to Gulf-based banks” as a result of the decline in oil prices and lower public sector deposits.

“The local banks still have healthy liquidity pools, but we expect a visible weakening, which in turn should tighten the funding available to corporates and increase their appetite for debt capital market issuance over the coming two years,” S&P said. “We also expect corporate loan pricing to rise markedly.”

However, Sara Carmody, a legal director with Addleshaw Goddard, said that the market for development funding remained active across the UAE.

“I think that the banks have liquidity to provide development funding,” she said.

“What we’re seeing is that banks are doing more due diligence upfront on projects, including questions on security and enforcement before agreeing to fund. There’s a culture where people are taking a long time to get to know projects before injecting funding.”

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