Aldar Investment Properties raises $500m from inaugural green sukuk

Aldar Properties subsidiary and real estate management company Aldar Investment Properties (AIP) has raised $500m through its inaugural green sukuk.

The 10-year sukuk was priced with a 4.875 per cent coupon rate. The effective funding cost for AIP will be significantly lower due to a pre-hedging strategy implemented in 2021 and 2022 when long term rates were materially lower.

As a result, the forward starting swaps secured will reduce the issuance’s effective rate to 3.85 per cent.

The issuance was four times oversubscribed, attracting a range of local, regional, and international investors that placed total orders of over $2.3bn.

The issuance is part of a $2bn financing programme by AIP to boost its growth agenda and sustainability commitments and the company’s plan to be a net zero carbon business by 2050.

In January, Aldar launched its ‘Net Zero Plan’, with a commitment to becoming a net zero carbon business across its Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions by 2050.

The company also set science-aligned 2030 interim targets, which will see it achieve net zero in its Scope 1 and Scope 2 GHG emissions and deliver a 45 per cent reduction in the intensity of its Scope 3 GHG emissions relative to the company’s 2021 baseline.

In accordance with Aldar’s Green Finance Framework

The sukuk proceeds will be deployed in accordance with Aldar’s Green Finance Framework, which governs investment in sustainable projects such as green buildings, property upgrades to enhance energy efficiency, sustainable water management, pollution control measures, and renewable energy sources.

Faisal Falaknaz, acting chief financial and sustainability officer at Aldar Properties, commented: “This issuance marks Aldar’s return to international capital markets for the first time since 2019 and is the first corporate benchmark sized sukuk issued from Abu Dhabi since 2020. It is also Aldar’s inaugural green issuance, and the robust investor demand reflects the confidence in Aldar’s approach to ESG and the business model that will deliver on our net zero commitments.

“As a leading integrated real estate developer, investor, and manager, Aldar has a clear responsibility and opportunity to align fully with the UAE’s net zero ambitions. We are already investing significantly in energy efficiency across our property portfolio. Our green financing initiatives will now allow us to step up our climate action agenda.”

Aldar Investment Properties: A diversified portfolio

AIP, which houses a diversified portfolio of income-generating real estate assets valued at over Dhs23bn, benefits from a strong investment grade credit rating of Baa1 from Moody’s. In addition, Aldar’s progress on sustainability has driven recent improvements in its ESG ratings with an upgraded MSCI ESG rating to BBB and an enhanced score of 16.1 on Sustainalytics’ ESG risk assessment scale, indicating the company’s lower level of ESG risk.

Lastly, the company achieved 60 points on the Dow Jones Sustainability Index (DJSI) which moved the company into the top 7 per cent of the 237 global real estate companies surveyed.

It has adopted a green financing framework, which aligns with the United Nations Sustainable Development Goals and is based on principles set out by the International Capital Markets Association and the Loan Market Association. The framework sets out criteria for use of proceeds and is governed by Aldar’s Sustainability Council.

It also obtained a ‘Second Party Opinion’ from Sustainalytics to externally verify the sustainability quality of the framework and its alignment with Green Finance Principles.