Aldar Properties marks milestone, issues $1bn hybrid notes

Aldar Properties has successfully priced its inaugural $1bn hybrid capital issuance, attracting significant demand from a wide spectrum of regional and international investors.

The issuance marks a landmark achievement for Aldar, as it stands as the largest conventional hybrid in the Middle East.

The transaction, conducted at Aldar’s level, sets a new precedent for hybrid capital in the Central & Eastern Europe, Middle East, and Africa (CEEMEA) region, securing the highest rating and tightest credit spread for a corporate hybrid issuance in the region.

The issuance represents a proactive step in enhancing the company’s financial resilience, reinforcing its strong balance sheet while laying the groundwork for continued growth and strategic expansion.

Proceeds from the hybrid issuance will support Aldar’s transformation strategy, including replenishing its landbank, expanding its “develop to hold” portfolio, and facilitating acquisitions.

The issuance garnered impressive demand, being oversubscribed by 3.8 times, with total orders surpassing $4.9bn from institutional investors across diverse regions.

The final allocation saw significant interest from the Middle East and North Africa (41 per cent), the UK (38 per cent), Europe (9 per cent), North America (8 per cent), and Asia (4 per cent).

Investor confidence in Aldar’s growth story

The company’s group chief financial and sustainability officer, Faisal Falaknaz, expressed his satisfaction with the strong demand, noting that it reflects investor confidence in the company’s vision and strategic direction. “The strong appetite for this issuance from a broad base of international institutional investors is a statement of confidence in Aldar’s vision and strategic direction,” he said.

“The company has carved a credible and proven track record of delivering measured and sustainable growth, and this landmark hybrid issuance supports the continued execution against our growth ambitions,” Falaknaz added.

The company’s growth strategy, focused on landbank expansion, acquisition opportunities, and maintaining a strong financial foundation, is now further strengthened by this hybrid issuance, designed to optimise its capital structure while positioning the company for long-term value creation for all stakeholders.

Hybrid issuance: Key features

The hybrid issuance consists of unsecured, subordinated 30.25-year notes, offering investors an initial yield of 6.625 per cent.

These notes come with a non-call period extending to 7.25 years, providing additional flexibility.

Coupon payments, which are distributed semi-annually, can be deferred for up to five years, with both cumulative and compounding features, adding further flexibility to Aldar’s capital structure.

In January, Moody’s reaffirmed Aldar’s Baa2 credit rating with a stable outlook and assigned a standalone credit rating of Baa3 to the hybrid notes. The rating reflects Aldar’s robust financial standing and strong market position.

The hybrid issuance is treated as both debt and equity for ratings purposes, contributing to its financial flexibility while being non-dilutive and accretive for its equity investors.

Strategic use of proceeds and optimisation of debt profile

The proceeds from the hybrid issuance will be strategically used to pay down senior debt, further enhancing the company’s overall credit profile.

This approach preserves debt capacity for its growth pipeline, ensuring the company is well-positioned to execute its ambitious plans for expansion and value creation.

The issuance was marketed under Regulation S and led globally by Citi, with Abu Dhabi Commercial Bank, Bank of China, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, Intesa Sanpaolo, J.P. Morgan, Mashreq, National Bank of Ras Al Khaimah, and Standard Chartered serving as joint lead bookrunners.

As Aldar continues to scale its operations and strengthen its market presence, the success of this hybrid issuance underscores the growing investor confidence in its ability to deliver on its transformational growth strategy.