Aldar Properties the third-largest Gulf Arab real-estate developer by market value, said it plans to borrow as much as $4 billion to fund projects in the United Arab Emirates and abroad.
Aldar, which is developing 70 billion dirhams ($19.06 billion) worth of projects in Abu Dhabi, the UAE's largest emirate, will sell its first Islamic bonds early next year, Aldar Chief Financial Officer Shafqat Malik said in an interview on Monday.
"If you look at the scale of our projects, they require substantial funds," he said. "In the next three years we are looking to put together 3 to 4 billion dollars in financing." Aldar will announce an 85-billion-dirham leisure project for Abu Dhabi before the end of the year, Aldar Chief Executive Ronald Barrott said.
It will also start developing real estate projects in Morocco and an eastern European nation in the first half of next year, its first foreign ventures, he said, declining to be more specific. Aldar will also buy stakes in real estate-related companies, Barrott said.
"We need to ensure our investments are spread as far as investments are concerned," said Barrott, who was appointed CEO on September 20. "Exposure to other countries or continents will enable us to ride those cycles."
Aldar, which raised 1.5 billion dirhams in an initial public offering in 2005, borrowed 1.4 billion dirhams earlier this year from a group of banks, including Britain's Barclays Plc Malik said. He declined to identify the other lenders.
Malik said Aldar would list its first Islamic bond, or sukuk on the Abu Dhabi stock exchange. "There's is a lot of liquidity, especially in Islamic finance," he said.
Islamic corporate debt issues are on track to double in value this year in the Gulf Arab region. In the first-half Gulf Arab companies sold $4.59 billion worth of sukuk compared $2.15 billion in the same period last year, according to British law firm Trowers & Hamlins.
Saudi Arabian Basic Industries Corp sold Saudi Arabia's first sukuk this year, an $800 million issue that was well oversubscribed before it closed in July. Dubai-based Emaar Properties the largest Gulf Arab real estate developer by market value, said last week it was seeking to raise a $1 billion loan that complies with Islam's ban on interest.
Unlike conventional bonds, sukuk are typically backed by assets that generate income from which the borrower pays the lender profit rather than interest. Through expansion overseas, Aldar expects to generate 45 percent of its revenue from foreign operations within five years, Barrott said.
That mirrors Emaar's international growth into markets such as Morocco, Pakistan and Saudi Arabia. Emaar's $43 billion residential and commercial development of two islands off Karachi is the company's largest venture. Only nationals of the UAE, Opec's third-largest producer, can own shares of Aldar. The Abu Dhabi government owns 13 percent of the company.