By Arabian Post Staff
Emirates Strategic Investments Company (ESIC), an Abu Dhabi-based investment company owned by Sheikh Mansour bin Zayed al-Nahyan, a member of Abu Dhabi’s royal family, said it has acquired two mixed-use properties in the United Arab Emirates (UAE), one of a series of investments to be funded by last year’s successful issuance of the company’s US$600 million (Dh2.2 billion) sukuk.
The Dh1 billion (US$ 272 million) property purchase comprises a total of 1,352 residential and commercial units spanning a built-up area (BUA) of 238,800 square metres and carries an expected net yield of more than 8 percent.
The deal reflects a return of big-ticket investment in to the UAE’s real estate sector where the rock-bottom asset price provides good investment opportunities for large investors.
The deal was funded by ESIC’s Dh2.2 billion (US$600 million) debut sukuk that was issued in July 2019 to a warm reception from investors. The five-year Sharia-compliant instrument was part of ESIC’s US$1 billion sukuk programme, which is listed on the London Stock Exchange. It was priced upon launch with a 3.939 percent profit rate, which was 35 basis points tighter than initial estimates. The sukuk was in great demand, with more than 135 investors from more than 20 countries showing interest, leading to the offering being 6.2 times oversubscribed at an overbook of Dh13.6 billion (US$3.7 billion).
Rated Baa3 by rating agency Moody’s, the company, which has a portfolio of assets across different sectors in the UAE, had last year hired Standard Chartered and First Abu Dhabi Bank as coordinators for the five-year Islamic sukul sale.
The recent property purchases are situated in prime locations within the UAE and represent significant opportunities for resilient income streams. These two factors distinguished the assets to ESIC’s leadership team. “ESIC was established to support Abu Dhabi Economic Vision 2030 and other strategic initiatives of the UAE,” said a company statement. “Real estate is a key component of ESIC’s diversification strategy. By identifying quality assets and acquiring them at the optimal moment, we bring great value for our sukuk investors. This latest purchase reflects our deep commitment to the continued bolstering of our real-estate portfolio with high-quality, high-yield assets.”
This deal is part of ESIC’s plan for a series of strategic acquisitions, which will not only expand its real- estate portfolio, but also branch into sectors such as aviation and Government-backed clean energy initiatives. The company intends to make further acquisition announcements at its upcoming investor conference.
“Guided by our strong corporate governance, and disciplined investment strategy, ESIC will continue to diligently monitor multiple industries for potential assets that will strengthen our foothold and that of our investors, both locally and internationally,” the statement said. “We are pledged to seek out opportunities that will ensure the highest growth in terms of income and capital returns in our 2020 financial results. As per our fiduciary duty, we shall make full disclosure on the 2019 results before April 30th.”
The sukuk investors included banks, fund managers and investment funds from across the GCC and around the world. ESIC’s extraordinary success with the medium-tern note (MTN) funding programme is expected to pave the way for other UAE-based private entities to access international capital markets, as well as promote the development of Islamic finance in the country.
Also published on Medium.