Dubai’s Emirates REIT picks Standard Chartered for debut dollar sukuk, say sources

Emirates REIT, a Dubai-based sharia-compliant real estate investment trust, has appointed Standard Chartered to lead its planned debut US dollar-denominated sukuk, sources familiar with the matter said.

The sukuk transaction, which according to a company’s presentation could range between $350m and $425m in size, will be issued before the end of the year or in the first quarter of next year at the latest.

Emirates REIT’s sukuk will be the latest corporate addition to the Gulf debt capital markets, which are in their second consecutive record-breaking year in terms of volume of issuance as corporates and sovereigns borrow funds internationally to mitigate the impact of lower oil prices.

Debt issuance in the Gulf totalled $63.5bn last year and it exceeded $80bn so far this year, Thomson Reuters data showed.

Emirates REIT plans to issue the sukuk, or Islamic bond, to fully replace its existing debt and lengthen the debt repayment profile of the company.

“The REIT is due to repay circa $45m of debt each year in the next five years, which will no longer have to be repaid/refinanced post sukuk, potentially until 2022,” said Arqaam Capital in a research note.

In addition to Standard Chartered, other banks could be appointed to lead the planned sukuk transaction. According to the company’s presentation, banks including Dubai Islamic Bank – which is the company’s largest shareholder – Emirates NBD, Shuaa Asset Management, Mashrek Capital and RAK Bank were interested in marketing the sukuk.

Emirates REIT had a portfolio value of $845m as of the end of September. Its portfolio includes mixed-use properties, office buildings and schools in Dubai.