Arada Completes Issuance of $450 Million Sukuk

The UAE’s master developer Arada Developments, on Tuesday said that it has successfully completed the issuance of a $450 million sukuk, which has been listed on the London Stock Exchange (LSE) and the Nasdaq Dubai.

The five-year fixed rate RegS Sukuk issuance was priced with a coupon of 7.15%, tightening 47.5bps- 60bps from the initial price guidance of 7.625%-7.75% for a spread of 317 bps over US Treasuries, for the tightest reoffer yield ever achieved by Arada, the company said in a statement.

The proceeds of the issuance will be used for a tender offer of up to $100 million on Arada’s existing Sukuk maturing 2027, with the balance for general corporate purposes.

The Sukuk issuance saw strong demand from both regional and international investors with a subscription order book peaking above $2 billion (excluding Joint Lead Managers), equivalent to over four times the offer size.

HRH Prince Khaled bin Alwaleed bin Talal, Executive Vice Chairman of Arada, said that their latest successful return to the global markets reflects once again the trust being placed by regional and international investors in Arada’s track record, robust financial position and growth prospects.

This issuance serves as a platform of our next phase of growth as we continue target growth opportunities both at home in the UAE and abroad, he said.

Investor interest for the Sukuk was diversified geographically, coming from Europe, the Middle East and Asia. The investors for this issuance include banks, private banks, asset and fund managers and hedge funds.

Since its launch in 2017, Arada has launched nine successful projects in both Sharjah and Dubai, and has a pipeline of existing and future projects in the UAE and Australia valued at over $24.5 billion. In total, Arada has sold over 17,000 units since inception, valued at over AED29 billion, with over 10,000 units completed. 

Past Sukuk Issuances

It may be recalled that Arada has closed a $150 million tap of its existing $400 million sukuk issued in June and listed on both the LSE and Nasdaq Dubai last year. Part of the master developer’s $1 billion Sukuk programme, the tap took the issuance over benchmark size to $550 million.

The tap was priced at $102.54 with tap yield of 7.35% (representing a 15bps tightening from Initial Pricing Thoughts).

Excluding Joint Lead Managers’ demand, the subscription orderbook peaked at over $480 million, 3.2 times the offer size. The proceeds for the sukuk will be used for general corporate purposes and to support development at Arada’s existing projects.

In 2023, the master developer announced a 100% increase in the total value of property sold to $1.91 billion, compared to the previous year. In total, Arada has sold over 14,000 units since inception, with over 10,000 units completed.

In August this year, Arada also announced its first overseas expansion into the Australian property market, with the launch of an office in Sydney, alongside a project pipeline valued at $1.63 billion.