AD buys Dh16.8bn Aldar assets

Aldar Properties has announced unit sales, asset transfers and reimbursements with the government of Abu Dhabi for a total consideration of Dh16.8 billion.

According to the company statement, the Government of Abu Dhabi has purchased 760 three, four and five bedroom units within the Al Bandar, Al Zeina and Al Muneera developments in Al Raha Beach for a total consideration of Dh3.5 billion.

Aldar retains ownership of the remaining inventory of units at Al Raha Beach, which are available for purchase or “rent-to-own.”

Revenue from the sale of residential units in Al Raha Beach will be recognized on practical completion and handover over 2012. As regards to Al Raha Beach infrastructure, there will be no immediate impact on the income statement as a result of this element of the transaction however cost of goods sold attributable to future land and unit sales will reduce in line with the reimbursements. Liabilities will decrease with the reduction of Dh 5 billion of the government of Abu Dhabi infrastructure loan.

In line with previous agreements with the Government of Abu Dhabi in relation to Yas Island, the government of Abu Dhabi has agreed to reimburse Aldar Dh5 billion towards certain existing and to be completed infrastructure assets at Al Raha Beach.

This amount will be settled by the immediate retirement of Dh5 billion towards the currently outstanding infrastructure loan from the government of Abu Dhabi. These infrastructure assets will be transferred to the relevant government authorities as and when directed by the Government of Abu Dhabi.

The government of Abu Dhabi tasked Aldar with the redevelopment of part of Abu Dhabi’s city centre in 2005, known as Central Market. In line with previous transactions relating to strategic assets, existing assets of Central Market and its associated infrastructure have been sold to the government of Abu Dhabi for Dh 5.7 billion.

Aldar will be responsible for the construction management and supervision of the completion of the project as well as the immediate day-to-day operation and management of the facilities and tenant relations on behalf of the government of Abu Dhabi. The estimated completion costs of Dh2.6 billion will be funded by the government of Abu Dhabi. The proceeds from the sale transactions will be received over the next four years pursuant to an agreed payment schedule which includes the receipt of Dh 4.5 billion in the next two months.

The sale of Central Market will be immediately recorded through the income statement, the company said.

Ali Eid AlMheiri Chairman of Aldar Properties, said: “Following the financial framework announcement in January of this year, the board undertook a comprehensive review of Aldar’s business model, finances and operations. As part of this process, we continued negotiations with the government of Abu Dhabi, which led to the transactions we are announcing today, that are designed to create the solid financial foundation needed to drive returns to shareholders. Moreover, we have realigned our organizational structure, reduced headcount and refined our business strategy.

“With a substantial land bank across Abu Dhabi, Aldar is well placed to capitalize on future development opportunities based on demonstrable market demand. Aldar will also benefit from sustainable recurring revenues from our office, retail, hotel and education assets, as well as development management fees from large scale third party projects,” he said.

According to the company, today’s transactions will immediately reduce Aldar’s indebtedness by Dh 5 billion and continue the deleveraging of its balance sheet.

The developer has repaid Dh14.2 billion in debt during 2011 including the Dh 4.5 billion convertible sukuk on November 10, 2011. In addition, equity has further increased with the conversion of Dh2.106 billion convertible bonds to Mubadala on December 15, it said.

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