Aldar Investment Properties announced it has agreed to acquire full ownership of Etihad Plaza and Etihad Airways Centre in an AED 1.2 billion transaction with Etihad Airways. As part of the deal, Etihad will take 100% ownership of Etihad Airways HQ. The three properties were previously held in three 50/50 joint ventures between Aldar Properties and Etihad. The transaction is expected to complete in Q2 2019.
This is the first major transaction for Aldar Investments which launched in September 2018. Aldar Investments is a wholly-owned subsidiary of Aldar and, upon its creation, became the region’s largest diversified real estate investment company. On completion, AED 1.2 billion of investment properties and other assets will be acquired by Aldar Investments in exchange for transfer of full ownership of Etihad HQ to Etihad. As part of the transaction, Aldar will assume existing debt within the Etihad Plaza and Etihad Airways Centre JVs, which will be kept in line with Aldar Investment’s established debt policy to hold 35-40% loan to value.
The deal adds 789 residential units, 17,940 sqm net leasable area (NLA) of office space and 11,000 sqm NLA of retail space to Aldar Investments’ existing high-quality portfolio. Full ownership of these assets will enable Aldar Investments to recognise annualised annual net operating income of AED 0.1 billion, previously reported as a share of profits from the JV. Aldar Investments will also continue to benefit from a strong tenant base with long leases that provide solid visibility of income.
Aldar Investments also appointed Jassem Saleh Busaibe as its Chief Executive Officer. In this role, Busaibe will oversee the implementation of Aldar Investments’ strategy through the active management and growth of its high-quality portfolio.
Etihad Plaza is a mid-rise residential development which houses Etihad employees in apartments ranging from one to four bedrooms and is fully leased to Etihad on a long-term lease expiring 2034. It also offers a number of retail units comprising offices and medical facilities for Etihad Airways, and retail and food & beverage units which are leased out to third parties.
Located within one of Aldar’s completed developments in Al Raha Beach, Al Muneera, Etihad Airways Centre comprises predominantly office space and a retail offering. The offices are fully leased to Etihad Airways on a long-term lease expiring 2032. The majority of the ground floor retail units are sublet to retailers such as Carrefour, Jones the Grocer, Style and Smile and Al Wahda Pharmacy, with Etihad Airways occupying the remaining retail space on the ground floor.
This deal builds on a transformational 2018 for Aldar, when the Group completed three strategic corporate actions. In March 2018 Aldar entered into a strategic partnership with Emaar; then in May last year, Aldar acquired AED 3.7 billion of high-quality assets. This was followed in September by the creation of Aldar Investments, the region’s largest diversified real estate investment company.
Aldar recently released its full year 2018 financial results, reporting a 2% increase in revenue to AED 6.3 billion, and a 3% increase in net operating income from its recurring revenue assets. Aldar’s net profit was AED 1.9 billion, with gross profit of AED 2.6 billion and development sales of AED 2.6 billion. As a result of these solid results, the Board recommended a 14 fils per share dividend for 2018, representing a 17% increase over 2017 and the sixth consecutive year of growth.