Abu Dhabi real estate company owned by the ruling family sells Reuters for U.S. dollar Islamic bonds

Yusuf Saba

DUBAI (Reuters)-The private sector of Sheikh Mohamed Bin Khalid Al Nahyan LLC (PD) is a relatively small real estate company in Abu Dhabi, owned by members of its ruling family, and has hired a bank to sell Islam in USD for the first time Bonds or sukuk, a document on Monday showed.

The company owns 90% of its investment portfolio concentrated in the capital of the United Arab Emirates, and the rest is concentrated in neighbouring Dubai, hiring UAE NBD Capital and First Abu Dhabi Bank as global coordinators.

Documents from one of the banks show that Abu Dhabi Commercial Bank, Dubai Islamic Bank and Mashreq will arrange investor conference calls with them starting from Monday.

A five-year Islamic bond sale will follow based on market conditions. S&P Global (NYSE:) Ratings stated in a report that the proceeds will be used for capital expenditures and acquisitions.

The agency has assigned PD a sub-investment grade “BB” long-term issuer rating, subject to its “limited portfolio size and high leverage in the fragmented and weak Abu Dhabi real estate market”, but “subject to good Support of asset quality, location advantages and strong shareholders.”

Two sources familiar with the matter said that the bond sale was mainly to refinance existing loans, and one of the sources added that it could be about US$500 million.

The Gulf region rarely sees private companies entering the international bond market, and one of the sources said the transaction will pave the way for new issuers.

“They will return to the market. This is the first transaction,” the source said, adding that the goal is to continue this first five-year transaction in future medium and long-term financing.

“It’s almost there,” the source said, referring to regions where sovereign bond issuance accounted for about half of issuance in the past two years, although they are expected to account for a small portion of the market this year.

The company stated in an investor report reviewed by Reuters that its “strong relationship with the Abu Dhabi government” provided priority assistance in obtaining rezoning and planning approvals, as well as proven support, financial and in-kind. Donations, and other benefits.

Standard & Poor’s stated that PD’s properties under development are expected to bring revenue growth of 4% to 5% this year and 25% to 30% by 2022. Despite the increase and potential acquisitions, its investment portfolio “will remain small in the region.”

The real estate market in the United Arab Emirates-an important part of the country’s gross domestic product-was affected by the coronavirus crisis last year, with prices falling sharply in Abu Dhabi and Dubai.

“The Abu Dhabi real estate market is at a cyclical low point, which may inhibit the company’s growth,” Standard & Poor’s said.

According to investor presentations, as of the end of 2020, the company’s total debt was 2.17 billion dirhams ($590.86 million).

(1 USD = 3.6728 UAE Dirhams)