Aldar Investment Properties raises $500m from debut green sukuk

The funding will help the company to acquire more assets and meet its sustainability goals

Aldar Investment Properties a unit of Aldar Properties, the largest real estate management company in Abu Dhabi. Photo: Aldar
Powered by automated translation

Aldar Investment Properties, the real estate management unit of the emirate’s largest listed developer, Aldar Properties, has raised $500 million through its debut green sukuk as it looks to acquire more assets and meet its sustainability goals.

The 10-year Sharia-compliant issuance is part of the company’s $2 billion financing programme to support its growth agenda, in line with the UAE Net Zero by 2050 strategic initiative and Aldar’s plan to be a net zero carbon business by 2050, Aldar said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.

The proceeds of the transaction will be used in line with Aldar’s Green Finance Framework that governs investment in sustainable projects, including green buildings, property upgrades to enhance energy efficiency, sustainable water management, pollution control measures and renewable energy sources, the company said.

The issuance, which carries a 4.875 per cent coupon rate, received robust interest from local, regional and international investors. The deal was four times oversubscribed, with the orderbook reaching more than $2.3 billion.

The effective funding cost for the company, which controls a portfolio of income-generating real estate assets valued at more than Dh23 billion ($6.27 billion), will be “significantly lower due to a successful pre-hedging strategy”.

Aldar implemented the strategy over 2021 and 2022 when long-term interest rates were materially lower and that brings the effective interest rate to 3.85 per cent, the company said.

“As a leading integrated real estate developer, investor and manager, Aldar has a clear responsibility and opportunity to align fully with the UAE’s net zero ambitions,” said Faisal Falaknaz, acting chief financial and sustainability officer at Aldar Properties

“We are already investing significantly in energy efficiency across our property portfolio. Our green financing initiatives will now allow us to step up our climate action agenda.”

This issuance marks Aldar’s return to international capital markets for the first time since 2019 and the robust investor demand reflects the confidence in Aldar’s business and its approach to environment, social and governance standards, Mr Falaknaz added.

Companies across the GCC are increasingly looking to raise green financing to support their growth ambitions as governments in the oil-rich economic bloc push to meet their net zero commitments.

In February, Saudi Arabia’s Public Investment Fund raised $5.5 billion through the sale of a green bond, as the kingdom's sovereign wealth looks to finance or refinance its green investments.

The green bond deal was the PIF’s second in the five months after it raised $3 billion in a debut green bond in October last year.

In January, Aldar Properties unveiled a strategy to decarbonise its business as it works to become a carbon neutral company by the middle of the century in line with the UAE’s net-zero 2050 initiative.

The company has also set “science-aligned 2030 interim targets” that will help it to achieve net zero in its Scope 1 and Scope 2 greenhouse gas emissions.

The developer also aims to achieve a 45 per cent reduction in its Scope 3 emissions by the end of this decade, from the company’s 2021 baseline levels, it said at the time.

Aldar also said that all its new investments and acquisitions will be guided by sustainability and net-zero transition plans.

Last year, Aldar announced the launch of the Sustainable City project on Yas Island in response to growing demand for more sustainable living options in the emirate.

Updated: May 18, 2023, 8:00 AM