Bloomberg News

Emaar Raises $980 Million Financing to Extend Maturities

December 20, 2011

(Adds cost of facility in third paragraph.)

Dec. 19 (Bloomberg) -- Emaar Properties PJSC, the United Arab Emirates’ biggest developer by market value, agreed to 3.6 billion dirhams ($980 million) in financing at a price lower than its existing debt to help extend maturities.

Dubai Islamic Bank PJSC, Standard Chartered Plc and National Bank of Abu Dhabi PJSC provided the loan facility, which is backed by the flagship Dubai Mall, Emaar said in an e- mailed statement today. Half of the Islamic and conventional facility will be repaid in five years, while the rest will be amortized over eight years, it said.

Emaar will pay 350 basis points, or 3.5 percentage points, over the benchmark rate for the facility, less than the cost of existing borrowings, the company said in a statement without providing further details. Emaar in January sold $500 million of Islamic bonds due August 2016 at a profit rate of 8.5 percent.

Dubai’s property market went from being one of the world’s best performing to the worst following the global credit crisis three years ago, with home prices slumping 64 percent since the mid-2008 peak, according to Deutsche Bank AG estimates. Emaar has been hurt by the downturn but avoided a debt restructuring, unlike Nakheel PJSC, the builder of man-made islands off Dubai.

Emaar will use part of the money to repay a $300 million facility taken in 2010 and will draw down the rest in 2012, it said.

The financing shows “Emaar’s ability to raise long-term finance at competitive pricing even in tougher economic conditions,” Chairman Mohamed Alabbar said in the statement. The loan will also help strengthen reserves, he said.

Emaar in October said third-quarter profit declined 34 percent as revenue dropped and fewer finished properties were delivered to buyers. The company’s hospitality, shopping mall and retail subsidiaries have posted “sustained growth” this year and the company will hand over residential projects in Saudi Arabia and other global markets shortly, it said today.

--Editors: Ross Larsen, Claudia Maedler.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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