Press Dossier   News Category    Economy    Aldar shifts its debt, key assets worth Dh20b to new subsidiary

KHALEEJ TIMES, Thursday, Sep 13, 2018 | Muharram 3,1440

Aldar shifts its debt, key assets worth Dh20b to new subsidiary

Emirates: Abu Dhabi-based property developer Aldar Properties on Wednesday announced creating an investment unit called Aldar Investment Properties which will raise capital independently of Aldar and also intends to issue new sukuk.

The developer announced that ownership of some of its revenue-generating real estate assets worth Dh20 billion will be transferred to this investment company.

Aldar Investments will earning recurring revenues through its assets of 5,000 residential units and over 500,000 square metres of prime retail and commercial space. This includes assets of Yas Mall, Aldar HQ and the Gate Towers & Arc, and more than 2,400 hotel rooms, mainly on Yas Island.

Aldar Properties shares plunged more than two per cent on Wednesday to Dh1.87 as against Dh1.91 close on Tuesday. More than 10.76 million shares changed hands worth Dh20.15 million in 258 trades.

Moody's Investors Service on Wednesday assigned Baa1 rating to Aldar Investments and said the developer is transferring the bulks of its recurring revenue property assets to this new subsidiary. Aldar Investments' Baa1 rating is positioned one notch higher than that of its parent, Aldar Properties, as the newly formed firm holds Aldar Properties' lower business risk recurring revenue property assets.

"Aldar Investments' Baa1 rating reflects the high quality recurring revenue asset portfolio, with a stable tenant base and occupancy rates, which partially offsets its geographic concentration risk in the emirate of Abu Dhabi," said Lahlou Meksaoui, a Moody's Assistant Vice President-Analyst.

Moody's said Aldar Investments would need to establish a track record of adhering to conservative financial policies under a new corporate governance structure and maintain debt to total assets below 30 per cent as well as Earnings before interest, tax, depreciation and amortisation (Ebitda) to interest expense above 6.0x on a sustainable basis and through an investment cycle. Aldar Investments will actively assess opportunities to expand its asset base beyond traditional real estate asset classes to ensure it leverages key real estate market trends, the company said in a statement. Greg Fewer, chief finance officer, Aldar Properties, told reporters that parents company will move its existing debt to new subsidiary and its shares could be sold through an IPO in the future. Mohamed Khalifa Al Mubarak, chairman, Aldar Properties, said as the owner of Dh20 billion of prime real estate assets, Aldar Investments provides an opportunity for investors to benefit from Abu Dhabi's AA rated economy.

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