Aldar Investment Properties issues $500 million green sukuk
The 10-year sukuk was priced with a 4.875% coupon rate and is amongst the highest price tightening of any corporate issuance in 2023
Aldar Investment Properties (AIP), the largest real estate management company in Abu Dhabi and subsidiary of Aldar Properties (Aldar), has successfully raised $500 million through an inaugural green sukuk.
The 10-year sukuk was priced with a 4.875 per cent coupon rate and is amongst the highest price tightening of any corporate issuance in 2023.
The effective funding cost for AIP will be significantly lower due to a successful pre-hedging strategy implemented in 2021 and 2022 when long term rates were materially lower.
As a result, the forward starting swaps secured will reduce the issuance’s effective rate to 3.85 per cent.
Following a global investor roadshow, the issuance was four times oversubscribed, atracting a range of local, regional, and international investors that placed total orders of over $2.3 billion.
The issuance forms part of a $2 billion financing programme by AIP to support its growth agenda and sustainability commitments, in line with the goals of the Paris Agreement, the UAE Net Zero by 2050 Strategic Initiative and Aldar’s plan to be a net zero carbon business by 2050.
The sukuk proceeds will be deployed in accordance with Aldar’s Green Finance Framework, which governs investment in sustainable projects such as green buildings, property upgrades to enhance energy efficiency, sustainable water management, pollution control measures, and renewable energy sources.
Faisal Falaknaz, Acting Chief Financial and Sustainability Officer at Aldar Properties, commented, “This issuance marks Aldar’s return to international capital markets for the first time since 2019 and is the first corporate benchmark sized sukuk issued from Abu Dhabi since 2020.”
“It is also Aldar’s inaugural green issuance, and the robust investor demand reflects the confidence in Aldar’s approach to ESG and the business model that will deliver on our net zero commitments.
“As a leading integrated real estate developer, investor, and manager, Aldar has a clear responsibility and opportunity to align fully with the UAE’S net zero ambitions. We are already investing significantly in energy efficiency across our property porfolio. Our green financing initiatives will now allow us to step up our climate action agenda.”
Aldar Investment Properties, which houses a diversified porfolio of income-generating real estate assets valued at over AED23 billion, benefits from a strong investment grade credit rating of Baa1 from Moody’s. In addition, Aldar’s progress on sustainability has driven recent improvements in its ESG ratings with an upgraded MSCI ESG rating to BBB and an enhanced score of 16.1 on Sustainalytics’ ESG risk assessment scale, indicating the company’s lower level of ESG risk. Lastly, Aldar achieved 60 points on the Dow Jones Sustainability Index (DJSI), which moved the company into the top 7 per cent of the 237 global real estate companies surveyed.
Meanwhile Aldar Properties, last week, has announced a series of achievements and strategic initiatives in its latest quarterly report. The company’s strong performance was driven by increased demand from both international and resident expat buyers, with record quarterly development sales of Dhs4.5 billion.
Aldar’s development revenue backlog also hit an all-time high of Dhs18.8 billion, which provides visibility over the next 2-3 years. The company’s expansion plans include the acquisition of Al Fahid Island, which will add a unique waterfront offering to its development pipeline. Additionally, Aldar has entered the Dubai real estate market through a joint venture with Dubai Holding, which will see the development of three new communities across 3.5 million sqm of land.
Aldar has also partnered with Mubadala to develop commercial assets in Al Maryah Island, tapping into the high demand for prime office spaces in Abu Dhabi’s growing international finance centre.
The company’s diversified investment portfolio also performed well, with a buoyant rental market and rising occupancy across the porfolio. Recent acquisitions have also performed above expectations, adding to the company’s solid financial position.
Aldar Properties has maintained a healthy liquidity position with AED 6.1 billion of free cash and Dhs4.4 billion of commited undrawn facilities, enabling the company to capture atractive growth opportunities. Aldar has also reaffirmed its commitment to climate action, launching a comprehensive Net Zero Plan that outlines its pledge to decarbonize the business by 2050.
Aldar has adopted a green financing framework, which aligns with the United Nations Sustainable Development Goals and is based on principles set out by the International Capital Markets Association (ICMA) and the Loan Market Association. The framework sets out criteria for use of proceeds and is governed by Aldar’s Sustainability Council, which comprises senior management and is chaired by Aldar’s Group Director of Sustainability and CSR.