Staff Report
Dubai, UAE
Sobha Realty, a Dubai-based private developer of luxury communities, has successfully raised US$300 million (Dh1.1 billion) through Sukuk that was listed on Nasdaq Dubai recently, marking a significant development in the real estate financing sector in the UAE.
The fund will help Sobha Realty to accelerate the development of its newly-launched projects, announced recently. Sobha Realty has an impressive development portfolio that includes Sobha Hartland, Sobha Hartland II and Sobha Reserve – all master-planned communities.
“The Islamic issuance listing introduces a new dimension to the GCC sub-investment grade Sukuk market by becoming the first of its kind to include a call feature. The Sukuk, which has a tenor of five years, offers investors an attractive annual profit rate of 8.75 percent, which is payable semi-annually,” said a joint statement by Nasdaq Dubai and Sobha Realty. “With this listing, Dubai further solidifies its position as a leading hub for regional and international debt listings, reaching a total value of US$117 billion and reinforcing its prominence in the market.”
The Sukuk issuance garnered exceptional investor diversification, with a notable participation from international investors. This achievement highlights Sobha Realty’s commitment to innovation and its ability to attract a diverse range of investors from around the globe. To commemorate the successful listing, Ravi PNC Menon, Co-Chairman of Sobha Realty, and Hamed Ali, CEO of Nasdaq Dubai and Dubai Financial Market (DFM), rang the bell at the market-opening ceremony at Nasdaq Dubai.
Hamed Ali, CEO of Nasdaq Dubai and DFM, said, “We are thrilled to commemorate the milestone debut Sukuk listing of Sobha Realty on Nasdaq Dubai. This significant achievement not only underscores the robustness and attractiveness of the Dubai capital market but also highlights the increasing demand for Islamic finance instruments in the region. Nasdaq Dubai remains dedicated to fostering innovation and advancing the growth of the UAE financial market, and we are proud to offer a diverse range of investment products. We extend our wholehearted support to Sobha Realty and eagerly anticipate their prosperous journey in the region.”
PNC Investments is the principal sponsor of Sobha Sukuk Ltd. Dubai Islamic Bank, Mashreqbank, Emirates NBD Bank PJSC, Standard Chartered Bank, and Sharjah Islamic Bank are joint lead managers while The Bank of New York Mellon, London branch is the principal paying agent.
International law firm Dentons said, it has advised Standard Chartered Bank, Dubai Islamic Bank, Emirates NBD Capital, Mashreqbank and Sharjah Islamic Bank as Joint Lead Managers on the successful debut issuance of US$300 million Trust Certificates due 2028 by Sobha Sukuk Limited, a special purpose vehicle (SPV) issuer incorporated in the Cayman Islands.
“The transaction, which settled on 17 July 2023, represents the inaugural international capital markets issuance by Dubai-based real estate developer, Sobha Realty. PNC Investments LLC (the parent company of Sobha Realty) was obligor on the transaction,” Dentons said in a statement.
The Sukuk Certificates were assigned a rating of Ba3 by Moody’s Deutschland GmbH and a rating of BB- by S&P Global Ratings Europe Limited. The transaction is dual-listed on the International Securities Market of the London Stock Exchange and on Nasdaq Dubai, and the Trust Certificates were offered to sophisticated investors outside the US in reliance upon Regulation S under the US Securities Act of 1933. The proceeds of the issuance will be used by PNC Investments LLC to settle existing financings and for its general corporate purposes, according to Dentons.
Ravi PNC Menon, Co-Chairman of Sobha Realty, said: “The successful listing of our USD 300 million Sukuk on Nasdaq Dubai exhibits strong investor confidence in Sobha Realty’s growth strategy and strong financial position. We were successful in attracting a diverse pool of investors through our Sukuk issuance, both domestically and internationally, which is a testament to our continued success and long-term vision. We hope to leverage this capital to shape our expansion strategies, contribute to the long-term development of the real estate sector, and create sustained value for our stakeholders.”
Through this listing, Sobha’s Sukuk has paved the way for regional debut issuers by becoming the first corporate issuer from the region in a senior unsecured benchmark-sized format this year. Sobha Sukuk is expected to use at least 55 percent of the sukuk proceeds to purchase the lease assets from Sobha Capital under a sale-and-purchase agreement; and a maximum of 45 percent of the sukuk proceeds to acquire a portfolio of commodities (murabaha assets). PNCI will be the lessee under the lease agreement and the purchaser under the murabaha agreement, the document says.
“PNC Investments is expected to use the proceeds of the issuance primarily to refinance existing debt and for general corporate purposes,” the document says. “Its total gross debt balance after the issuance is estimated at Dh2 billion. Therefore, the amount of debt that can be refinanced will depend on the final sukuk issuance amount.”
Dentons’ Dubai Debt Capital Markets partner Alex Roussos, added: “We are thrilled to have supported the Joint Lead Managers and Sobha Realty on its inaugural sukuk issuance. This was a highly significant transaction for the company and we are delighted to have been able to support to help bring the transaction to market. The market continues to be supportive of issuers from the local and regional real estate sectors and we hope this will remain the case for the foreseeable future.”
The Dentons team in Dubai was led by partner Alex Roussos, with assistance from senior associate Brian O’Leary and senior legal consultant Katie Phillips.
Ends
