MAF Inks Terms for $500 Million Egypt Mall Loan

Majid Al Futtaim Holding (MAF) has agreed terms for a new $500 million loan to fund a shopping centre in Egypt where the mall developer had to take write downs after Arab Spring protests, its chief executive said. MAF, the sole franchisee of Carrefour hypermarkets in the Gulf, said it took writedowns of 300 million dirhams ($81.68 million) on its hotel assets in Bahrain and 250 million dirhams on its Egypt assets in 2011, Iyad Malas said.

"There was an adjustment of value of assets both in Bahrain and Egypt," he told reporters, adding the firm had to write down valuations of two hotels built adjacent to Bahrain City Centre. "Based on the lower occupancy rates we see at this stage at Bahrain, we decided to write the value of these assets down." However, he said that the value of these assets has gradually increased now.

In Egypt, MAF is developing the Mall of Egypt project in Cairo, a 160,000-square metre site in Cairo which will be one of North Africa's largest shopping centres. Malas said the company is in the final stages to secure finance for the project. Earlier this month, sources told Reuters the company had chosen Banque Misr and National Bank of Egypt as lead arrangers for the $500 million loan. The Mall of Egypt loan had been earmarked for early 2011 but political unrest resulted in the plans being postponed, according to another source.

Daniele Vecchi, senior vice president for treasury, told reporters the commercial terms for the loan have been agreed. "We have talked to Egyptian banks and they are keen to look at the project. We have advanced our discussion with two major consortiums. It's pretty much finalised. The commercial terms are pretty much agreed, “Vecchi said.

MAF has two malls, three hypermarkets and supermarkets in Egypt. Malas said that despite the write downs, the overall asset value across its business increased. "That's because Dubai assets have improved ... revenue is improving everyday.” Gross revenue was up 10 per cent in 2011 to 19.6 billion dirhams, while total assets hit 36.1 billion dirhams. The company issued a $400 million sukuk, or Islamic bond, in February, and Malas said the company will tap the bond market again, if needed, expressing a preference for longer-term financing options to fund the company's projects.