Doha Festival City deal expected to slip into 2012

13 December 2011

Bankers had hoped financing would be completed in 2011

Financial close on the debt funding for the QR6bn (($1.6bn) Doha Festival City mall development is expected to slip into early in 2012, missing previous expectations that the deal would be finished before the end of 2011.

Several sources close to the financing say that it is now unlikely to be closed as quickly as the project developers had hoped, although they are still trying to get it finished before the year end.

“The deal is almost ready to close, but there are still a few things to finish off with the documentation, so it is more likely to be an early 2012 deal now,” says one banker in Doha.

The financing will be for about QR3.8bn provided by a group of local banks. Because of new regulations by the Qatar Central Bank banning conventional banks from booking new sharia-compliant assets, the debt will be split between an Islamic tranche of around QR1.2bn and a conventional bank tranche of around QR2.8bn. Both have a tenor of 10 years.

Pricing on the deal is thought to be about 150 basis points above the Qatar Central Bank reference rate, the local currency benchmark. Banks financing the development of the Festival City project include Qatar National Bank, Commercial Bank of Qatar, Doha Bank and International Bank of Qatar on the conventional tranche and Qatar Islamic Bank, Qatar International Islamic Bank and Barwa Bank lending on the Islamic tranche.

Doha Festival City is being developed by the UAE’s Al-Futtaim Group and the local Qatar Islamic Bank, with QInvest acting as financial adviser on the scheme, along with Al-Futtaim’s investment and development arm, Al-Futtaim Capital.

It is one of several new malls being developed in Qatar that will lead to a huge increase in the amount of retail space in the country.

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