Sorouh to issue Islamic bonds worth $1bn

(SUPPLIED)   

Sorouh Real Estate will issue $1 billion (Dh3.6bn) in non-convertible Islamic bonds to finance Shams Abu Dhabi and parts of other projects, said its managing director.

Abubaker Seddiq Al Khouri, speaking at a press conference held after the general assembly meeting in Abu Dhabi, said Sorouh is in talks with local and foreign banks to obtain approval ahead of the bond issue.

Asked by Emirates Business about the date of the issue, he said: “I expect it will be very soon, maybe late this year. But we are optimistic the issue will take place in the next few months.”

On Wednesday, the general assembly approved cash dividends of 12 fils per share for 2007. And Sorouh will present the required documents to the Emirates Securities and Commodities Authority (Esca) on Sunday to allow founders to sell their shares, the managing director added. The selling process is expected to start in the latter half of April.

Rather than focus on the rise or fall of Sorouh shares on the Abu Dhabi Securities Market, Al Khouri said the board cares about the completion of company projects and strengthening its performance. “We have nothing to do whatsoever with the rise or fall in demand for the company share.”

He said the rate of foreign ownership of Sorouh shares has risen to 17.8 per cent, stressing this confirms the confidence enjoyed by the company at local and international levels. “The rate of ownership by foreigners is set at 20 per cent and the board has no intention at the moment to increase this ceiling,” he added.

Shams Abu Dhabi, which will be partially financed by the bond issue, is Sorouh’s largest project in Abu Dhabi and is already 45 per cent complete, he said.

In two months’ time, major construction work will begin on Sorouh’s residential project Al Ghadeer, which is located between Abu Dhabi and Dubai. Phase one has an area of three million square metres and the entire project will cost between Dh18bn and Dh20bn, he said. Al Ghadeer will have 7,500 residential units – villas, rest houses, town house and apartments. The project will be executed in two phases and is expected to be completed in three to four years.

He said the announcement of the project had been delayed due to changes in the project’s design.

Overseas, Sorouh has established two companies to follow up its projects in Morocco and Egypt, said Al Khouri, adding they have acquired a large plot of land in Marrakesh with an area of two million square metres.

A second plot of land of five million square metres was acquired in Egypt, on the Cairo-Ismailia highway. Tourist projects, hotels and resorts will be built there. However, Al Khouri said Sorouh has not defined the two new companies’ capital yet and is still studying the final costs of the Morocco and Egypt projects.

Sorouh netted Dh1.2bn in 2007, a 29 per cent rise compared to 2006. These are real operation profits rather than a result of the re-evaluation of company assets, he said.

Asked if the rise in the price of land acquired by Sorouh from the Abu Dhabi Government is behind the increase in net profits, Al Khouri said assets grew as a result of progress and speeding up of projects. He said Sorouh has started to acquire diversified sources of income that would highlight the its potential to have stable cash flows.

He also said strong demand for land, flats and leasing contributed to raising the level of performance last year. During the press conference, Al Khouri refrained from answering a question whether the Abu Dhabi Government will grant Sorouh new land over the coming period. “We are working to complete the projects that are under way and are not in a position to announce acquisition of new land.”