Arada Secures $400M Sukuk, Oversubscribed by 3.5 Times

Sharjah-based real estate developer Arada Developments LLC (“Arada”), rated B1 by Moody’s and B+ by Fitch, has successfully issued its second public financing deal, a $400 million Sukuk. This milestone marks the first issuance under Arada’s newly established $1 billion Sukuk program, listed on both the London Stock Exchange and Nasdaq Dubai.

A Closer Look at the Sukuk Issuance

The five-year fixed rate RegS Sukuk issuance, rated BB- by Fitch and B1 by Moody’s, was priced at par with a coupon of 8.000%, tighter than the initial guidance of 8.675%. This represents a spread of 355 basis points (bps) over US Treasuries. The issuance achieved one of the highest price tightenings by a real estate issuer from the GCC, with the spread being more than 150 bps inside the previously priced debut Sukuk.

The $400 million proceeds from the Sukuk will be allocated towards managing existing bilateral funding, general corporate purposes, and supporting development projects within Arada’s portfolio.

Impressive Investor Demand

The Sukuk issuance saw robust demand from both regional and international investors, with a subscription order book totaling $1.45 billion—3.5 times the offer size. This overwhelming interest underscores Arada’s strong market reputation and investor confidence in its growth trajectory.

Prince Khaled bin Alwaleed bin Talal, Vice Chairman of Arada, expressed his satisfaction with the successful issuance: “We are pleased to have enjoyed a successful return to the market with the closure of our second Sukuk. This landmark issuance is a testament to the strong level of interest from institutional investors around the world in Arada’s stable track record, good governance, and compelling growth story.”

Global Investor Base

Investor interest in the Sukuk was geographically diverse, with participation from Europe, the Middle East, and Asia. The investors included institutional investors, fund managers, High Net Worth Individuals (HNWIs), and banks. This broad investor base reflects Arada’s growing international appeal and the credibility of its financial offerings.

Joint Global Coordinators and Lead Managers

The Joint Global Coordinators for the Sukuk were Abu Dhabi Commercial Bank, Dubai Islamic Bank, Emirates NBD Capital, and Standard Chartered Bank. Additionally, Arab Bank, Kamco Invest, Mashreq, RAK Bank, Sharjah Islamic Bank, and Warba Bank acted as Joint Lead Managers and Bookrunners, ensuring the successful execution of the issuance.

Arada’s Growth and Achievements

Since its inception in 2017, Arada has launched six successful projects in Sharjah and Dubai, with a combined sales value of AED 60 billion. Notable projects include Sharjah’s largest mixed-use megaproject, Aljada; the UAE’s first forested community, Masaar; and the ultra-luxury Armani Beach Residences at Palm Jumeirah.

In 2023, Arada announced a 100% increase in the total value of properties sold, reaching AED 7.02 billion compared to the previous year. Since its launch, Arada has sold 14,000 units valued at over AED 17 billion, with over 9,000 units completed. This impressive track record demonstrates Arada’s capacity to deliver high-quality, desirable real estate developments.

Arada’s $400 million Sukuk issuance, significantly oversubscribed at 3.5 times, highlights the strong investor confidence in the company’s vision and execution. The successful issuance not only supports Arada’s ongoing projects but also positions the company for continued growth and expansion in the real estate sector. With a solid foundation and a commitment to innovation and excellence, Arada is set to further solidify its position as a leading real estate developer in the region.