Sobha Realty’s $500m Sukuk Draws Robust Global Demand

Sobha Realty has successfully completed a $500 million sukuk issuance, marking a significant milestone in its financing strategy. The issuance, part of a $1.5 billion Sukuk Issuance Programme, attracted substantial investor interest, with the order book oversubscribed three times, reaching $1.54 billion. This strong demand led to a tightening of the yield to 8% per annum, down from the initial price thoughts of 8.375%.

The sukuk, maturing in 2029, has been listed on both the London Stock Exchange and NASDAQ Dubai. Allocation of the issuance saw 61% directed to local investors and 39% to international participants, underscoring the global confidence in Sobha Realty’s financial health and the positive outlook for Dubai’s real estate sector.

This latest issuance follows Sobha Realty’s strategic tap into its existing sukuk framework. The initial $300 million sukuk was issued in July 2023, with an outstanding balance of $270 million prior to this tap. The combined efforts have elevated the company’s total sukuk holdings to the benchmark size of $500 million.

The transaction was facilitated by a consortium of financial institutions, including Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, Sharjah Islamic Bank, and Standard Chartered Bank, serving as Joint Global Coordinators, Joint Lead Managers, and Bookrunners. Legal counsel was provided by Clifford Chance and Dentons, while Grant Thornton acted as the auditor, ensuring transparency and adherence to regulatory standards.

Credit rating agencies have acknowledged Sobha Realty’s robust financial performance. Standard & Poor’s upgraded the company’s rating from BB-/Positive to BB/Stable, and Moody’s elevated the sukuk rating from Ba3/Stable to Ba2/Stable. These upgrades reflect the company’s substantial EBITDA growth, a larger revenue backlog, and improved EBITDA margins.

Sobha Realty’s strategic financial maneuvers align with its broader growth trajectory. In 2024, the company reported record-breaking sales of AED 23 billion, including AED 5 billion from the launch of Sobha Siniya Island. This performance represents approximately 50% year-on-year growth, driven by a diverse portfolio of properties in the UAE.

The company’s expansion plans extend beyond the region, with initiatives to establish a presence in the USA and Australia. Additionally, Sobha Realty has been recognized as the second most recalled real estate brand in the UAE for the second consecutive year, according to a brand health study among property seekers.