Tecom Investments in talks over $1bn of property funding

The company is talking to a syndicate of banks to raise the money by way of a medium term loan.

Tecom Investments is investing Dh4 billion for phase one the Dubai Design District, above, which is expected to the completed early next year. Courtesy Government of Dubai
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Tecom Investments, Dubai’s business parks operator, is negotiating a funding package of about US$1 billion to fuel projects in the emirate’s expanding property market.

The company is talking to a syndicate of banks to raise the money by way of a medium term loan. It said it was “seeking to raise a syndicated loan facility to support future growth opportunities and other strategic objectives”.

It declined to give details, but a person familiar with the group, run by the chief executive Amina Al Rustamani, said Tecom had lots of projects under way, mainly in property development in the emirate, and was looking to exploit the “momentum” in the property market.

Tecom is owned by the Government-related enterprise Dubai Holding. It is possible that some of the proceeds of the funding could be “upstreamed” to the parent company, the person said, but no decision had been taken on that, nor on the final terms and timing of the syndicated loan, which were still under negotiation.

The potential bank lenders were not identified, but a financial source suggested they were likely to be mainly UAE banks, with other regional lenders also possible members of the syndicate. Tecom already has a relationship with Mashreq Bank of Dubai.

Tecom was a leading part of the Dubai strategy of setting up free-zone business parks that offered 100 per cent ownership to non-Emiratis, and is perhaps best known for its flagship developments in Dubai Media City and Dubai Internet City. It now runs 10 free zones in the emirate, with interests running from education and biotechnology to media production and energy.

Most recently, the group has diversified into mainstream property development, with the project to build D3 – the Dubai Design District – and a villa development complex called Villa Lantana.

Phase one of D3, expected to be completed early next year, is estimated to cost about Dh4bn. There are no estimates for the cost of developing Villa Lantana, but 440 villas will eventually be sold at prices starting from Dh2.4 million

Despite the recent softening of property prices, Dubai has largely recovered from the slump that followed the 2009 global financial crisis that knocked as much as 60 per cent off property prices.

Dubai Holding has announced it is to build the Mall of the World, a retail and leisure complex close to Tecom’s original free-zone sites, at an estimated cost of Dh25bn over the next decade. The holding company, which also owns Dubai Property and the Jumeirah hotels group, this year agreed to terms with creditors to refinance $10bn of debts.

During the financial crisis, Tecom was regarded as one of the most valuable cash-generative parts of Dubai Holding.

Other Government-related enterprises in Dubai have also successfully renegotiated debt burdens from the crisis. Dubai World is thought to be near a deal to extend about $10bn of loans until 2022, while the property group Nakheel has been early on the repayment of more than Dh7bn of debts.

fkane@thenational.ae

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