Sobha Realty raises $750m in inaugural green sukuk, oversubscribed 2.8 times

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Sobha Realty, the UAE-based luxury property developer, said on Wednesday it has raised $750m through its first green sukuk, the largest ever by a real estate developer globally.

The five-year sukuk, maturing in 2030, was issued under the company’s $1.5bn trust certificate issuance programme.

It will be listed on the London Stock Exchange and Nasdaq Dubai, the company said.

Investor demand reached about $2.1bn, 2.8 times the issue size, allowing Sobha to tighten pricing by 50 basis points from initial price thoughts.

The sukuk was priced at a profit rate of 7.125 per cent per annum with an effective yield of 7.375 per cent.

Regional investors accounted for 56 per cent of allocations and international investors 44 per cent.

Proceeds will be used to finance or refinance projects under Sobha’s Green Financing Framework, which is aligned with the International Capital Market Association’s Green Bond Principles and the Loan Market Association’s Green Loan Principles. The framework received a second-party opinion from DNV.

“The resounding success of our inaugural green sukuk issuance is a powerful testament to the market’s recognition of Sobha Realty’s robust financial standing and our deep, unwavering commitment to sustainable development,” said Ravi Menon, chairman of Sobha Group.

Sobha green sukuk rating

The sukuk is expected to be rated Ba2 (Stable) by Moody’s and BB (Stable) by S&P, consistent with the corporate credit rating of the obligor, PNC Investments.

Dubai Islamic Bank, Emirates NBD Capital, J.P. Morgan, Mashreqbank and Standard Chartered acted as joint global coordinators. Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Ajman Bank, Arab Banking Corporation, Arqaam Capital, Deutsche Bank, First Abu Dhabi Bank, RAKBank, Sharjah Islamic Bank and Warba Bank were joint lead managers and bookrunners.

Deutsche Bank and Emirates NBD Capital were joint ESG structuring coordinators. Clifford Chance and Dentons acted as legal advisers and Grant Thornton was appointed auditor.