Dubai’s Atlantis, The Palm Set To Refinance $880 Million Loan

Dubai’s iconic island resort, Atlantis, The Palm, owned by Investment Corporation of Dubai (ICD) is looking to reprice or refinance an $880 million syndicated loan signed in September 2013, banking sources said.

The five-year loan was provided by seven local and international banks comprising Barclays, HSBC, Abu Dhabi Commercial Bank, National Bank of Abu Dhabi, Commercial Bank of Dubai, Union National Bank and Emirates NBD and was priced at 500 basis points (bps) over LIBOR.

Airport retailer Dubai Duty Free (DDF) is also in the process of repricing a $1.75 billion syndicated loan for the second time in just over a year to obtain more favourable terms, a fresh sign of banks’ willingness to lend cheaply to the emirate.

However, despite a more bullish market in the UAE it is unclear whether Atlantis would be able to reprice its loan as easily as DDF.

“Dubai Duty Free will be a clear mark to market repricing, it is a strong, well performing company but it is not as clear cut for Atlantis,” one banker said. “Atlantis is performing well but it is a very highly leveraged single asset business, I don’t know if it will be able to do a straightforward repricing or whether it will refinance with other banks joining the existing syndicate.”

FRAGILE RECOVERY

Atlantis The Palm was one of a handful of loans last year that highlighted a fragile recovery in the UAE after the financial crisis. Dubai’s luxury hotel chain Jumeirah also closed a six-year $1.4 billion loan in October 2013.

Bankers are predicting a fall in loan pricing in the region as liquid local banks and international banks desperate to deploy capital create an attractive environment for borrowers. As a result bankers are confident Atlantis will be able to get a deal done.

“Atlantis is a very leveraged single asset but a deal will still get done, and it will be a good reference point going forward,” said a second banker. “Banks are now very competitive and desperate for assets and borrowers are tapping into that. The loan pipeline looks positive.”

Atlantis was acquired by Dubai’s state-owned flagship holding company in December 2013 for an undisclosed sum. ICD has holdings in some of the emirate’s most high profile brands including Emirates airline, Emaar Properties and lender Emirates NBD.

The Palm opened in 2008 as a joint venture between Kerzner International Holdings and UAE holding company Istithmar. In 2012 Kerzner took full control of the company.