Sharjah’s Arada raises $100m as it taps into existing sukuk to fund growth plans

The proceeds from the latest deal will be used for general corporate purposes and to support the development of Arada’s existing projects, the company says

Beta V.1.0 - Powered by automated translation

Sharjah Property developer Arada has closed a $100 million Islamic bond deal after it tapped into an existing $350m sukuk that was issued and listed on the London Stock Exchange in June.

The sukuk tap was priced at 99 cents on the dollar, with an investor yield of 8.386 per cent, the company said on Friday.

The tap had “resilient demand” from the global finance markets, with a lead order of $185m, the company said.

Proceeds will be used for general corporate purposes and to support the development of the company's existing projects, it said.

The company “continues to expand at an extremely rapid pace … to maintain that aggressive growth strategy, we took the decision to tap the markets opportunistically to secure the capital that will guarantee our plans remain on track”, said group chief executive Ahmed Alkhoshaibi.

Arada, a joint venture between KBW Investments — a company controlled by Saudi Arabia’s Prince Khaled bin Alwaleed — and the Basma Group of Sharjah, is currently building a Dh24 billion ($6.53bn) Aljada master development in Sharjah, apart from other projects.

It also recently announced plans to build a Dh6.3bn office park in Sharjah and develop five new residential projects in the UAE as part of efforts to boost its property portfolio.

Earlier this year, the company purchased a plot of land on The Palm Jumeirah in Dubai for Dh240 million.

It is also currently in negotiations to buy additional plots in Dubai and Sharjah for new projects as the property market in the UAE continues to recover from the Covid-19 pandemic on the back of the government initiatives such as residency permits for retirees and remote workers, as well as the expansion of the 10-year golden visa programme and the economic boost generated by Expo 2020 Dubai.

Off-plan and secondary property sales in Dubai hit a 12-year high in the third quarter, both in terms of volume and value, according to a report by Property Finder.

A total of 25,456 sales transactions worth Dh69.72bn were recorded in the third quarter, marking an increase of about 62 per cent in terms of volume and more than 65 per cent in terms of value, compared with the third quarter of 2021.

Arada is on “track for a year-on-year 25 per cent increase” in the value of the property sold in 2022 to Dh3bn and is also aiming to complete 4,000 homes during the course of the year, it said.

In total, Arada has sold about 11,000 units since inception in 2017, valued at more than Dh8bn. The developer has completed 2,600 units, with another 27,500 homes in the pipeline.

The joint lead managers and bookrunners on the latest sukuk deal were Standard Chartered Bank and Emirates NBD Capital, HSBC, Abu Dhabi Commercial Bank, Mashreq, Sharjah Islamic Bank, Kamco Invest, and Warba Bank, according to the company.

Updated: October 21, 2022, 11:16 AM