Sorouh to issue Dh4bn sukuks

Sorouh Real Estate is to issue Dh4billion Islamic bonds based on expected return from its investments to fund two of its largest property projects in Abu Dhabi.

The sukuks will be issued in the next few weeks and are the first securitisation Islamic bonds to be launched by a UAE company, Sorouh said in a statement.

"Sorouh Real Estate PJSC will be marketing a Dh4 billion Shariah-compliant securitisation sukuk, over the next few weeks," it said.

"The sukuks are the first to securitise future contracted receivables from sub-developers for its flag ship projects Shams Abu Dhabi and Saraya. The transaction includes three classes of sukuk certificates rated by Moody's and S&P."

It said the proceeds from the sukuks would be used by the company to finance infrastructure on Shams Abu Dhabi as well as other projects including Saraya.

The mandated lead arrangers on the transaction are Citibank, First Gulf Bank, Abu Dhabi Commercial Bank, the National Bank of Abu Dhabi and Noor Islamic Bank. Citibank is the Global Co-ordinator for the transaction, the statement said.

It gave no details of the bonds, but experts said securitised sukuks would be guaranteed by expected return from Sorouh projects.

"This type of sukuks means the company wants to borrow from the market through bonds to fund its projects; its balance sheet might not sustain such a big issue so it is using its projects and the expected return from them to guarantee these bonds," said Mohammed Yassin, Director of the Emirates Securities Company.

He explained securitisation is a structured finance process, which involves pooling of cash-flow producing financial assets into securities that are sold.

The company did not provide the ratings by Moody's and S&P but is expected to do so once it launches the bond issue in line with recent rules by the Emirates Securities Authority that all potential bond issuers must get prior credit rating from an authorised rating agency.

Sorouh, one of the largest real estate developers in the Middle East, is investing billions of dirhams in Shams Abu Dhabi, which involves the construction of residential units and other facilities for more than 55,000 people on Reem Island close to Abu Dhabi city. Saraya is one of the most important projects of Sorouh Investment as it comprises high-class residential complexes, modern offices, lush gardens and parks along Abu Dhabi's Corniche just behind Sheraton hotel.

Sorouh is one of three main developers of Reem Island, which covers an area of nearly 630 hectares (79 million sqft). Sorouh owns 20 per cent of the island project while Tamouh Investments controls 60 per cent and Al Reem Investments holds the remaining share.