Dubai's Emirates Reit plans debut sukuk of at least US$300m this year: source

[DUBAI] Dubai-based Emirates Reit, a Syariah-compliant real estate investment trust, plans to issue a debut Islamic bond of at least US$300 million by the end of this year, said a source close to the company.

The sukuk, to be denominated in US dollars, could potentially replace all of the company's outstanding debt, said the source, who spoke on condition of anonymity because of commercial sensitivities.

The addition of a new issuer to the Gulf's international bond market comes at a time of record debt sales in the region, as governments raise debt to plug budget deficits and corporates change their capital structures in an era of low oil prices.

Dollar-denominated bond issuance out of the six-nation Gulf Cooperation Council has totalled US$79.2 billion so far this year, higher than the record US$63.5 billion during the whole of 2016, Thomson Reuters data shows.

Emirates Reit, managed by Equitativa, has called a shareholder meeting on Nov 23 to discuss the planned sukuk, which could be issued shortly after that date, said the source.

The company's total debt as at June 30 was about US$300 million. The loan-to-value (LTV) ratio of the Reit stood at 36.8 per cent, below its regulatory maximum LTV of 50 per cent, which means there is room for issuance larger than US$300 million, the source added.

The company, which receives rental revenues from its real estate assets, had a portfolio of US$772 million at the end of June. Its portfolio includes mixed-use properties, office buildings and schools in Dubai.

REUTERS