Aldar acquires real estate assets from TDIC in Dh3.7bn deal

Aldar Properties reached an agreement with Tourism Development & Investment Company to acquire real estate assets worth Dh3.7 billion, in one of the largest real estate acquisitions in the country’s history.

Aldar, the biggest-listed developer in Abu Dhabi with $10bn in assets, expects the deal to be completed by the end of June, it said in a statement to the Abu Dhabi Securities exchange, where its shares are traded.

The developer behind Abu Dhabi's Ferrari World theme park has acquired assets located in key destinations in the emirate, with a focus on Saadiyat Island. The 14 operating assets bought from the state-controlled TDIC range from hospitality and retail to residential and education. Other assets in the portfolio include prime land plots and some of underdevelopment projects on Saadiyat Island, Aldar said.

The acquisition “presents Aldar with an unprecedented opportunity to add significant value to its portfolio,” said Talal Al Dhiyebi, the chief executive of Aldar Properties. “We believe this landmark acquisition will further advance Abu Dhabi’s real estate sector and accelerate the development of Saadiyat Island, taking it to the next level.”

Aldar’s move is the latest sign of consolidation efforts in the UAE’s real estate market. Abu Dhabi firms Eshraq Properties and Reem Investments in August said they are considering a potential merger to create the second-largest listed developer in the emirate. In March, Aldar and Emaar Properties, entered a joint venture to develop Dh30bn worth of projects pipeline with an initial focus on two developments in Abu Dhabi and Dubai.

Concerns of oversupply amid softer economic conditions reduced sale and rental values of properties. The headwinds over the past few years have prompted developers to solidify their recurring revenue lines and consider mergers and acquisitions or forge partnerships to gain scale in order to better cope with the market conditions.

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"If you look at the bigger picture ... the lower oil price environment has meant that cooperation...was almost inevitable:  we are [now] seeing it manifest itself in forms of different partnerships or exchange of assets," Faisal Durrani, the UK-based head of research at Cluttons said.

Such deals are "hugely positive. We are in a place where various entities had acted independently for long and the fact that they are sharing expertise and assets means that they are collectively coming together and presenting a more unified front." A bigger asset base, Mr Durrani said, is more appealing to the global investor base rather than stand alone entities.

The acquisition of TDIC’s operating assets will enhance Aldar’s asset management business with an additional stream of recurring revenue in line with its growth investment plan. The operating assets being acquired include Eastern Mangroves complex, Saadiyat Island district cooling assets, Cranleigh School Abu Dhabi and Westin Golf & Spa, which Aldar said, will deliver an incremental net operating income of approximately Dh120 million to its asset management portfolio on an annualised basis.

The deal for the land and projects under development will form part of Aldar’s development destination strategy. The gross development value of these projects is Dh2.5bn, while the land being acquired is located on Saadiyat Island, is infrastructure enabled and includes approximately 1.1 million square metres gross floor area, the company said.

“The acquisition will immediately positively contribute to the performance of both the development and asset management business in 2018 and beyond,” Aldar said in the statement. “We’re well placed to take advantage, with the injection of these new assets.”

Saadiyat Island is regarded as one of the prime locations in Abu Dhabi’s real estate market. It is home to the Louvre Abu Dhabi, which opened its doors to visitors last year. The Islands’ cultural district will expand further through the development of the Zayed National Museum and Guggenheim Abu Dhabi, which clearly marks further growth opportunities, Aldar noted.