Dubai Firm Nakheel selling $1 Billion sukuk bonds to fund expansion

DUBAI: Dubai-government owned developer Nakheel plans to sell about $1 billion sukuk to fund expansion and raise 8bn dirhams ($2.18bn) of equity via an IPO of real estate investment trusts.The property firm, which is building three palm-shaped islands off the coast of the Gulf trade and tourism hub, will sell a two-year dirham-denominated floating rate Ijara sukuk, chief financial officer Kar Tung Quek said yesterday.

“Every year we have a business plan and we need about $5bn,” Quek said.

“We finance it either through land, pre-sales and borrowing.”

Dubai Islamic Bank, JP Morgan and NBD Investment Bank are joint bookrunners for the sale, which will follow a roadshow in the GCC countries and London starting on April 20, an official at one of the banks managing the sale said yesterday.

“It will be up to $1bn… we will go on the roadshow and if it goes well, then it will be about that,” Quek said.

The bonds would be listed on the Dubai International Financial Exchange, where Nakheel already lists about $1.7bn of Islamic bonds.

Nakheel said yesterday profit last year surged almost five-fold to $1.28bn on more land and property sales.

Revenue from the sale of land surged almost nine-fold to 10.5bn dirhams, while costs associated with building apartments fell by almost three-quarters to 1.53bn dirhams and for houses by the same magnitude to 1.12bn dirhams, Nakheel said.

The company had $26.4bn of projects under construction in January last year, according to its statement.

Nakheel is also looking to raise about 3bn dirhams of equity to finance housing and 5bn dirhams for infrastructure projects via an initial public offering of real estate investment trusts (REITs)

“We hope to submit our proposals to the exchanges in early July and hopefully going to the market in October,” he said.

The REITs would be listed on the DIFX with possibly a dual listing in Singapore.