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Emaar Properties reportedly secure Dubai loan target.

According to banking sources Emaar Properties have finalised a US$ 800 million Islamic loan spread among three banks, at 3.5 per cent payment above the

benchmark rate.

The United Arab EmiratesAAE (UAE) largest developer by market value will also incur fees on the facility. Islamic loans pay a profit rate only to ensure Sharia

compliance, meeting a religious ban on usury, more commonly referred to as interest payments.

A final agreement, encompassing a 5-year bullet loan along with an 8-year amortizing facility, is set to be signed on the 4th of December 2011. Providers are

Dubai Islamic Bank, National Bank of Abu Dhabi and Standard Chartered with EmaarAAEs headline Dubai Mall, being put up as a collateral guarantee for the


In the three years following the global credit crisis DubaiAAEs property market has effectively crashed, with property values falling by a best case 64 per cent, in

some instances as much as 70 per cent, from an asking price peak in 2008. While EmaarAAEs inventory has fared better than that of it state backed peers, it

has still suffered withering returns, reporting a 34 per cent dip in profits in the third quarter of 2011. However, it has not been forced to restructure debt, whereas

others like Nakheel had no choice.

In October, Emaar chairman Mohammed Alabbar told media that the firm had adopted a borrowing strategy to raise US$ 700 million, in order to build a

commercial centre as part of its Eighth Gate development in the Syrian capital Damascus. Given the current security situation and Arab League economic

sanctions, this stage of the project looksAAE unlikely to reach fruition any time soon; nor in the opinion of many analysts does it form the basis for sound

investment, with the host nation in aggressive political turmoil. The firm handed over a dedicated office precinct containing 315 units as phase one of the project

in June this year, but has not commented as to whether it has received full and final payment in return.

Other relatively recent Emaar fund raising activities included the issue of US$ 500 million as five-year convertible notes to settle their accounts with

contractors, as well as converting a proportion of its US$ 1.4 billion in near term loan maturities into longer term debt, in September 2010. The company has

also sold Islamic Bonds to the value of US$ 500 million that are scheduled to mature in August 2016.


Copyright Andy McTiernan. All rights reserved.

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Publication:Andy McTiernan Property & Economy Bulletin
Date:Dec 2, 2011
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