Sharjah-based real estate developer Arada has raised USD 400 million through a five-year Sukuk issuance, marking a significant development in the UAE’s real estate debt market amid ongoing regional geopolitical uncertainty. The transaction represents an important step in the company’s financing strategy, enabling it to refinance existing obligations while maintaining funding for its expanding development portfolio.
The Sukuk was priced at a yield of 9%, with a coupon rate of 8.875%, representing a spread of 407.4 basis points over US Treasury securities. Investor demand exceeded USD 650 million, approximately 1.6 times the total issuance size. Strong demand allowed Arada to reduce its initial yield guidance from around 9.375% by approximately 37.5 basis points, reflecting investor interest in the offering.
Arada plans to use approximately USD 200 million of the proceeds to refinance existing debt. The company has launched a tender offer to repurchase up to USD 200 million of its outstanding USD 411.7 million Sukuk maturing in 2027. This arrangement is intended to help manage upcoming debt obligations while retaining at least USD 200 million from the new issuance for other corporate requirements. Following investor approval of a new redemption option in September, Arada also has the right to redeem the remaining 2027 Sukuk certificates that are not tendered, subject to the applicable terms and conditions.
The issuance comes amid heightened volatility in the UAE real estate debt market. Earlier in the year, regional geopolitical tensions contributed to increased credit spreads on several US dollar-denominated bonds issued by property developers, including Binghatti Holding and Omniyat. Against this backdrop, Arada’s latest Sukuk achieved a spread of 407.4 basis points over US Treasuries, compared with a reported spread of 707 basis points on the company’s existing 2030 bond. Although the securities may differ in maturity and other terms, the pricing highlights the financing conditions achieved by Arada through its latest transaction.
Arada holds B1 and B+ credit ratings from Moody’s and Fitch, respectively, both with negative outlooks. Despite the challenging market environment, the successful placement demonstrates continued investor appetite for selected real estate issuers offering competitive yields. The transaction also highlights the importance of effective debt management and diversified financing strategies for property developers operating in uncertain economic conditions.
The new funding comes as Arada continues to expand its regional presence. The company recently announced its entry into Saudi Arabia through a planned USD 3.8 billion development project in Riyadh. Its development pipeline is reported to stand at AED 185 billion across five markets. The latest Sukuk issuance is expected to support the company’s broader financial strategy as it balances debt refinancing with its long-term development and expansion plans.
Several regional and international financial institutions participated in the transaction. Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, Standard Chartered and Mashreq acted as joint global coordinators. These institutions also served as joint lead managers and bookrunners alongside Arab Bank, Arqaam Capital, Bank ABC, Goldman Sachs International, JPMorgan, Sharjah Islamic Bank and Warba Bank. Emirates NBD Capital, Mashreq and Standard Chartered additionally acted as dealer managers for the tender offer.
Arada’s USD 400 million Sukuk issuance highlights the continuing role of Islamic capital markets in providing financing solutions for real estate companies. By combining debt refinancing with additional funding capacity, the transaction reflects how Sukuk can support liquidity management, diversify funding sources and facilitate long-term development strategies in a changing regional market.