Dubai-based Emirates Reit has closed a $400m, five-year sukuk or Sharia-compliant bond with a profit rate of 5.1 per cent annually, equivalent to a credit spread of 291 basis points over the mid-swap rate.

MEED understands the transaction is the Mena region’s first real estate investment trust (REIT) to access the international sukuk market and obtain a credit rating.

The sukuk represents the tightest credit spread of any debut issue by a Dubai real estate entity, the company said in a statement.

It is understood the order book peaked at $1.1bn and was 2.5 times oversubscribed by 90 global investors. The sukuk saw strong participation from international accounts, with the majority of the issuance (51 per cent) being allocated to international investors and the rest to UAE accounts. In terms of investor type, 48 per cent were banks, 35 per cent were fund managers, 11 per cent were private banks, 3 per cent hedge funds and 2 per cent were insurance companies and pension funds.

The proceeds will be used to refinance Emirates Reit's existing debt and replace amortising loans with bullet funding, which is expected to result in an increase of free cash flows by approximately $30m a year.

UK’s Standard Chartered Bank acted as global coordinator and ratings advisor. Dubai Islamic Bank, Emirates NBD Capital, Standard Chartered Bank and Kuwait-basedWarba Bank were the joint lead managers and bookrunners. UK-based law firm Clifford Chance acted as counsel to Emirates Reit while Dentons acted as counsel to the managers.