Arada raises USD 400 mn sukuk in first real estate debt issuance since war began

Sharjah developer Arada raised USD 400 mn through a five-year sukuk, the first public debt sale by a UAE developer since the US-Iran war began in February, Zawya reports. The certificates priced at a 9% yield with an 8.875% coupon, 407.4 bps over US Treasuries. Orders topped USD 650 mn, about 1.6x the size of the issuance. That demand let Arada cut the yield by c. 37.5 bps from initial guidance of around 9.375%.

Half the money refinances existing debt. Arada is buying back up to USD 200 mn of its USD 411.7 mn sukuk due 2027. The tender is capped at the new issue’s size minus USD 200 mn, leaving Arada at least USD 200 mn in fresh capital. Holders approved a new call right in September, so Arada can redeem any 2027 certificates that aren’t tendered.

Why it matters: The issuance is the first from a developer since the conflict hit, sending six USD-denominated property bonds from Binghatti Holding and Omniyat into distressed territory in March, with spreads above the 1k bps threshold that typically signals deep concern about repayment, as we’ve reported. The spread on a 2030 Arada bond more than doubled to 707 bps. Arada has now borrowed at around 407 bps, 300 bps tighter than its 2030 paper, even though it is rated B1/B+ with a negative outlook from Moody’s and Fitch.

The funds go to a developer expanding fast: Arada announced its Saudi debut with a USD 3.8 bn Riyadh project this week, and its development pipeline stands at AED 185 bn across five markets.

ADVISORS- Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, Standard Chartered, and our friends at Mashreq were joint global coordinators. They were also joint lead managers and bookrunners alongside Arab Bank, Arqaam Capital, Bank ABC, Goldman Sachs International, JPMorgan, Sharjah Islamic Bank, and Warba Bank. In addition, Emirates NBD Capital, Mashreq, and Standard Chartered are dealer managers on the tender offer.