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Our friends at Cenomi Centers have lined up SAR 5.25 bn in new syndicated secured banking facilitiesas the nation’s largest operator of shopping mall and lifestyle destinations pushes ahead with its growth strategy, it said in a statement (pdf). The debt includes both term and revolving murabaha facilities.
Taking advantage of good market conditions: The new facility is better priced for Cenomi than the debt it will replace, CEO Alison Rehill-Erguven told Al Arabiya in an interview, explaining that it’s “a testament to our improved credit profile with our banking partners” (watch: runtime: 3:48).
A message to the market: This is the first sustainability-linked transaction in the Kingdom’s real estate, leisure, and lifestyle sectors. An S-linked facility typically allows a company to reduce or constrain the cost of a borrowing provided it delivers on specific environmental, social, and governance metrics.
Cenomi Centers will use the funds to “support its ambitious growth plans” by both “contributing towards existing facility repayments and underpinning its capital strategy,” the company said.
Looking ahead: “We have an ambitious pipeline ahead of us. We just opened U Walk Jeddah, we did a soft opening and December, and we will have our grand opening this quarter. We’re also in the midst of constructing two flagships which we are incredibly proud of, which are Jawharat Riyadh and Jawharat Jeddah,” said Rehill-Erguven.
By the numbers: Jawharat Riyadh and Jawharat Jeddah will add more than 280k square meters of “features and attractions” including luxury offerings that Cenomi says will be unique in both the Kingdom and the region. The two will include “lifestyle experiences in partnership with some of the world’s most iconic brands” and should open in the first half of 2025, Cenomi said.
Facility #1: A sustainability-linked two-tranche, 12-year murabaha facility, according to a Tadawul regulatory filing. The facility includes both SAR- and USD-denominated components.
Facility #2: A revolving four-year murabaha facility with two one-year renewal options. The facility is also split into SAR- and USD-denominated components.
The ESG targets: Cenomi has committed to a carbon emissions reduction target, will increase the percentage of its assets connected to the grid, and will place more women in leadership roles. “The arrangements tie closely with our sustainability objectives,” Rehill-Erguven added. You can go deeper with Cenomi’s latest sustainability report (pdf).
Go deeper into sustainability-linked financing: It’s not the same thing as green finance, and it’s potentially very interesting to corporate borrowers who can commit to targets, Mashreq head of corporate and investment banking Joel Van Dusen told Enterprise Climate.
Cenomi boasts a healthy debt profile: The had debt on the books of about SAR 8.9 bn in 9M 2023, against SAR 27 bn in portfolio value, ultimately resulting in a 33% loan-value ratio which is “quite strong and quite healthy for a real estate company,” Rehill-Erguven told Al Arabiya. Of that debt, 60% is unsecured sukuk “which helps shield us as a company from a rising interest rate environment” while the balance is concentrated in secured banking facilities.
SOUND SMART- Combining a term loan with a revolving line of credit offers financial advantages including flexibility to navigate cashflow fluctuations, hedges against refinancing risks, it provides possibly cost efficiency, allowing a borrower to balance both its short-term needs and long-term growth goals.
ADVISORS- HSBC Saudi Arabia quarterbacked the transaction as the exclusive financial coordinator and lead sustainability coordinator. Our friends at Mashreq Bank joined Saudi National Bank (SNB), Saudi Awwal Bank (SAB), Arab National Bank (ANB), Commercial Bank of Dubai (CBD), Qatar National Bank (QNB) for the syndicate.
