Apollo acquires $400m strategic equity stake in Aldar Investment Properties

Deal forms part of the $ 1.4bn transaction announced in February

Aldar Properties recently acquired four prime Grade A commercial towers in Abu Dhabi Global Market, the international financial centre in Abu Dhabi. Photo: Aldar
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Apollo Global Management, one of the world’s largest alternative investment managers, has acquired a $400 million strategic equity stake in Aldar Investment Properties, a subsidiary of Abu Dhabi’s biggest listed developer Aldar Properties.

Apollo through its managed investment vehicles snapped up an 11.1 per cent minority stake in AIP after completing a Dh1.46 billion ($400m) transaction, Aldar said in a statement on Wednesday.

The acquisition is part of the previously announced $1.4bn investment by Apollo into Aldar’s transformational growth initiatives.

The transaction involved the issuance of $400m of common equity and mandatory convertible preferred equity at 100 per cent of net asset value into AIP, which houses Aldar’s core asset management business, comprising more than Dh23bn of prime property assets across retail, residential, commercial and logistics segments.

The diversified portfolio has proven highly resilient through business cycles, with occupancy standing at 92 per cent as of June 30, 2022, the company said.

“We welcome Apollo as strategic investors in Aldar Investment Properties at a time when we are building significant scale, diversification and synergies across the region’s premium platform for property ownership,” said Talal Al Dhiyebi, group chief executive of Aldar Properties.

“Apollo is a highly respected global investor, and this commitment displays strong belief in Aldar’s transformational growth agenda and reinforces the reputation of the UAE and Abu Dhabi, which is experiencing a trend of increasing capital inflows from long-term institutional investors.”

In March, as part of its investment into Aldar’s growth initiatives, Apollo invested $500m in Aldar’s perpetual subordinated notes priced at a coupon of 5.625 per cent for an initial non-call period of 15 years.

The latest transaction is a catalyst for AIP to significantly scale up its property platform through further transformative acquisitions.

“This transaction provides Apollo with exposure to prime institutional real estate in the UAE through a high-quality platform,” said Apollo's co-president Scott Kleinman.

“Apollo has confidence in the UAE’s increasingly dynamic investment landscape and the robust economic fundamentals that underpin it.”

AIP has been expanding rapidly this year. Last month, the company announced the acquisition of four prime Grade A commercial towers in Abu Dhabi Global Market, Abu Dhabi’s financial centre, for Dh4.3bn.

Aldar has committed more than Dh11bn of capital this year as part of its strategy for transformational growth, including Dh7bn plus in recurring income assets.

The developer behind Abu Dhabi's Formula One circuit and other big developments in the emirate is looking to expand both its footprint and portfolio of assets.

The property market in the UAE bounced back strongly from the Covid-19 pandemic-driven slowdown in 2021 and the trend has continued this year, as the Arab world's second-largest economy remains on a strong growth trajectory.

The UAE's economy is this year set to post its strongest annual expansion since 2011, after it grew by 8.2 per cent in the first three months of 2022 on higher oil prices and measures that stemmed the effect of the pandemic, the Central Bank of the UAE said.

Pent-up demand and improved investor sentiment have also helped to drive property sales, particularly in Dubai and Abu Dhabi, that is encouraging developers to launch new projects and further invest in acquiring assets to diversify their portfolios.

Aldar in recent months has been on an investment spree. Last month, the developer announced the acquisition of Ras Al Khaimah’s Doubletree by Hilton Resort and Spa Marjan Island, as well as an adjacent beachfront development plot for Dh810 million.

The acquisition made by AIP was the third investment by Aldar in Ras Al Khaimah this year, after deals to buy Al Hamra Mall and Rixos Bab Al Bahr in February and April, respectively.

Last month, Aldar further expanded its hospitality portfolio with the acquisition of Nurai Island Resort, as well as two new Abu Dhabi islands intended for residential development.

Updated: August 17, 2022, 1:52 PM
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