Sharjah’s Arada raises $50m through second tap of existing $450m sukuk

Sharjah property developer Arada has closed a $50 million second tap of its existing $450 million sukuk that was issued and listed on the London Stock Exchange in June last year. The five-year tap is the company’s third approach to the capital markets in the past nine months and the investor reoffer yield was 8.488 per cent, Arada said in a statement on Monday.

A tap issue is a procedure that allows borrowers to sell bonds or other short-term debt instruments from past issues. The bonds are issued at their original face value, maturity and coupon rate, but are sold at the current market price. “We’re extremely happy to have achieved a size of $500 million on our inaugural sukuk via the last two tap transactions,” Ahmed Alkhoshaibi, group chief executive of Arada, said. “This achievement is testament to the fact that investors have been tracking our story since May last year and have begun to appreciate and acknowledge our investor proposition, good governance record and credit strength,” Mr Alkhoshaibi said.

Mashreq acted as sole manager and bookrunner for the second tap. Arada's second tap followed a first tap executed in October for $100 million. At that time, Arada said it “received an exceptional response from international debt capital markets, which led to an oversubscribed transaction with orders of $185 million”.

Last month, Arada was awarded a major contract worth Dh475 million ($129 million) for the construction of four buildings in the Vida Aljada hotel complex in Sharjah as the country’s tourism sector continues to boom.

Arada, a joint venture between KBW Investments — a company controlled by Saudi Arabia’s Prince Khaled bin Alwaleed — and the Basma Group of Sharjah, is also expanding to Dubai and announced the launch of a Dh2 billion residential project in the emirate last year.

In December, Arada also awarded two contracts worth Dh939 million in total to speed up the construction of its Dh8 billion Masaar project in Sharjah.

The company is in talks with different entities including the Ministry of Housing and Roshn, a Public Investment Fund company, on plans to start a project in Saudi Arabia, Arada vice chairman Prince Khaled told The National in an interview on the sidelines of Cityscape Dubai in November.

It also aims to expand to Australia
Arada’s existing five-year fixed rate RegS debut Sukuk issuance was rated BB- by Fitch and B1 by Moody’s, the company said. The proceeds for the sukuk will be used for general corporate purposes and to support development at Arada’s existing projects.

The developer has launched four master planned projects in Sharjah and Dubai, with a combined sales value of Dh37 billion, since inception in 2017. It recorded a 46 per cent annual increase in the total value of property sold last year to Dh3.51 billion.

In total, Arada has sold over 11,000 units since inception, valued at over Dh10 billion. The developer has completed 6,800 units, with another 23,200 homes in the pipeline.