Arada sukuk: $400m issue reopens UAE property debt market

The $400 million Arada sukuk that closed on 30 October is the first international debt sale from a UAE property developer since the regional conflict began in February 2026, the Sharjah-based company said.

The five-year, fixed-rate, senior unsecured Reg S certificates, worth AED1.47 billion, were priced at a coupon of 8.875 per cent, tighter than initial price thoughts of 9.375 per cent. Arada said in its closing announcement that the final order book was more than $700 million, excluding interest from the joint lead managers, while subscription at peak demand reached twice the size of the issue.

The paper is listed on the London Stock Exchange and Nasdaq Dubai. The sukuk is rated BB- by Fitch and B1 by Moody’s. Arada Developments LLC itself has corporate ratings of B+ from Fitch and B1 from Moody’s.

Arada sukuk funds tender for 2027 paper

Arada characterised the deal as largely leverage-neutral. Part of the proceeds will be used to fund a capped tender offer of up to $180 million (AED661 million) for the company’s outstanding sukuk, which it described as debt management ahead of the June 2027 maturity of $411.7 million (AED1.51 billion) of 8.125 per cent certificates.

Market reports earlier in the week of pricing had put the order book above $650 million and the tender at up to $200 million. Arada’s closing announcement includes the higher demand number and the lower tender cap, which are the figures the company has confirmed.

Prince Khaled bin Alwaleed bin Talal Al Saud, Executive Vice Chairman of Arada, said the issue was “a testament to the resilience of Arada’s business” and attributed the result to continued confidence among regional and international investors in the company and in UAE real estate.

Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, Mashreq and Standard Chartered Bank were joint global coordinators. Arab Bank, Arqaam Capital, Bank ABC, Goldman Sachs International, JP Morgan Securities, Sharjah Islamic Bank and Warba Bank were joint lead managers and bookrunners.

The syndicate mixes UAE lenders with Gulf and international houses, a line-up that reflects the Reg S format and the regional investor base that typically anchors Gulf corporate sukuk.

Why the UAE real estate sukuk matters

UAE developers had not accessed international bond or sukuk markets since February, after the conflict widened spreads on Gulf real estate debt; spreads on Arada’s own 2030 sukuk had more than doubled to 707 basis points, EnterpriseAM reported, citing Zawya. Arada’s return, at a coupon below its initial guidance, now gives investors a fresh pricing benchmark for the sector.

The transaction also comes at a time when appetite for sub-investment-grade Gulf credit is being tested, after the region’s markets posted record foreign outflows in the third quarter. For other UAE developers with bonds maturing in 2027 and 2028, the deal implies that the primary market has reopened, albeit with yields far above pre-conflict levels.

The refinancing eases pressure on Arada by decreasing the volume of 2027 paper it has to repay from operating cash flow, while shifting part of its maturity profile out to 2031. Arada has been growing rapidly of late: it launched a Saudi subsidiary, Arada KSA, on 20 October with a land bank worth SAR50 billion ($13.3 billion), while on 15 October it agreed an AED1.1 billion forward sale of nine residential buildings at its Aljada development to Aldar Properties.

Arada was established in 2017. It says its combined portfolio of existing and future projects is worth in excess of AED185 billion ($50.4 billion). The company has sold over 20,000 homes in the UAE valued at over AED40 billion ($10.9 billion) and has completed over 17,000 units globally. Arada currently operates in the UAE, UK, Australia, Saudi Arabia and Syria.

The company characterises itself as a vertically integrated business. Aside from property development and its master-planned residential communities in Sharjah and Dubai, its interests include retail, education, healthcare, fitness and wellness, hospitality, investment and asset management.

What happens next

The tender offer to be made for the 2027 sukuk will be concurrent with settlement of this new issue, and investors will monitor uptake to see how much of the old paper is retired early. Rating agencies will judge whether the exchange and the leverage-neutral structure justify maintaining Arada’s B1 and B+ ratings.

More generally, investors will be keen to see follow-on issuance from other UAE-based developers before the end of the year. If the Arada sukuk withstands secondary market trading, it may pave the way for a host of refinancing deals across the UAE property sector in 2027.