Dubai's Atlantis hotel could increase $850m loan size

03 July 2013

Deal to fund Palm Jumeirah hotel is “substantially oversubscribed”

Dubai luxury hotel resort Atlantis, the Palm could increase the size of an $850m loan it is currently trying to raise after receiving a huge oversubscription.

The success of the deal is a reflection of the liquidity in regional banks and the high pricing offered on the transaction.

The hotel operator is now understood to have received all the commitments from banks interested in lending on the deal, and is aiming to complete the transaction by mid-July, according to lenders involved in the deal.

“The deal has been a huge success and is substantially oversubscribed,” says one banker based in Dubai. “There could be a small increase in the size of the loan.”

Atlantis, the Palm will pay a 5.5 per cent margin on the loan, falling to 3 per cent if it reduces debt levels or earnings before interest, taxes, depreciation and amortisation (Ebitda) improves. The relatively high pricing has helped attract banks into the deal.

Proceeds from the loan will be used to refinance a $700m 12-year loan arranged in 2005 to fund the development of the hotel, which spent $20m on a lavish opening party in 2008. The deal is being arranged by the local Abu Dhabi Commercial Bank, Commercial Bank of Dubai, National Bank of Abu Dhabi, and Union National Bank, and the UK’s Barclays and HSBC.

The hotel is wholly owned by Dubai World subsidiary Istithmar World, after it bought out its original partner in the project, Kerzner International for $250m in 2012.

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