Emirates REIT,  the UAE's first regulated shari'a-compliant real estate investment trust (REIT), has won approval from its shareholders for issuing its first US dollar-denominated sukuk (Islamic bond).

The sukuk transaction, which is likely to be in the range between $350 million and $425 million in size, will be issued by the year-end or in the first quarter of 2018.

The sukuk  trust certificates will be issued under a standalone Regulation S offering and will be listed on the Irish Stock Exchange, said the statement from Emirates REIT.

The five-year tenor sukuk will extend the REIT’s debt maturity profile and replace amortising loans with bullet funding, resulting in an increase of free cash flows by $30 million per year, it stated.

The sukuk will also allow the REIT to establish an international profile in the fixed income market and access a more diversified investor base.

Standard Chartered Bank has been appointed as global co-ordinator for the transaction, alongside Dubai Islamic Bank, Emirates NBD Capital and Warba Bank as joint lead managers, said a senior official.

Sylvain Vieujot, CEO of Equitativa Dubai, the REIT manager, said: "Having access to the debt capital market is strategic for the growth of REITs. This sukuk is an important milestone for us."

"Emirates REIT will have immediate financial benefits by significantly increasing free cash flow, and removing any rate increase risk which is advantageous in the current market environment," noted Vieujot.

A fixed income investor roadshow in the UAE, Asia and Europe kicked off yesterday (November 28).
 
"Going forward, maintaining a credit rating will increase the visibility of the REIT and investor confidence. It will also allow the real estate trust to take advantage of capital markets, to grow its portfolio and enhance its performance," he added.-TradeArabia News Service