Apollo Global Management, one of the world’s largest alternative investment managers, agreed to invest $1.4 billion through Apollo-managed funds and clients in Aldar Properties, which will help the company unlock value and represents one of the largest foreign direct investments in Abu Dhabi’s private sector.
The investment allocates $500 million into a land joint venture, $500m into perpetual subordinated notes issued by Aldar Investment Properties, $300m in mandatory convertible preferred equity investment in Aldar Investment Properties and $100m in common equity investment in Aldar Investment Properties, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded.
The $500m land joint venture will allow Aldar, Abu Dhabi's biggest-listed developer, to realise long-term value tied up in its vast land bank, while maintaining flexibility to develop or sell the land in line with its long-term strategy, the company said.
As part of the deal, Apollo will take a direct minority stake in Aldar Investment Properties with a $400m equity investment at its net asset value. The transaction is expected to close by the end of the first quarter of this year. Aldar will receive significant cash proceeds that will be used to drive further growth.
“This landmark transaction is a signal to the world’s investment community that Abu Dhabi’s real estate market is on a growth trajectory, supported by significant economic and social reforms, and a world leading response to Covid-19," said Talal Al Dhiyebi, group chief executive at Aldar Properties.
"Aldar’s ability to attract a long-term partner such as Apollo, underscores the strength of Aldar’s business franchise as well as the quality and investment appeal of the Abu Dhabi real estate market, both of which are driven by robust fundamentals underpinning long-term economic growth.”
The property market in the UAE, the second-biggest Arab economy, has made a strong recovery from the pandemic-induced slowdown amid business and social reforms and government stimulus measures.
The capital values of villas and apartments in Abu Dhabi rose to their highest level in five years in the fourth quarter of 2021, underpinned by a broader economic recovery, figures compiled by property consultancy ValuStrat show.
Pent-up demand and improved investor sentiment have also helped drive property sales in Abu Dhabi. New initiatives, such as visas for retirees and the expansion of the 10-year golden visa programme, are expected to further support the property market, industry experts said.
Apollo's Aldar investment follows a 2020 strategic partnership with Mubadala Investment Company, as well as a long-term joint venture with Adnoc in which Apollo funds and clients led a $2.7bn investment in a real estate joint venture.
Aldar Investment Properties is rated Baa1 by Moody’s, the highest credit rating for a non-government company in the region. The investment, for both Aldar Investment Properties and Aldar group, demonstrates the company’s ability to attract institutional capital into its real estate platforms, the company said.
“Diversifying our investor base and establishing partnerships is a key tenet of our growth strategy and is essential in enabling us to build scale, enhance asset diversification, and drive earnings growth," said Jassem Busaibe, chief executive at Aldar Investment.
"We wholeheartedly welcome Apollo as a long-term strategic investor and look forward to collaborating in order to grow our portfolio through additional value and yield accretive acquisitions. This transaction enables us to add further scale to our business and forms a critical milestone of our upcoming growth journey.”
Aldar, which earlier this month reported a 21 per cent jump in its full-year 2021 profit to Dh2.3bn ($644m), is planning to expand its portfolio of investments and its footprint outside the home market of Abu Dhabi. Aldar liquidity of Dh9bn on its balance sheet, providing significant "dry powder for growth", it said in a on February 9 statement.
The company plans to invest at least Dh5bn "free cash" in growth opportunities this year, Greg Fewer, Aldar's chief financial officer, said at the time.
"We have a pipeline [and] we believe we can deploy that," he said. "We will look to modestly level anything that we went into but we want to deploy our surplus capital pile as quickly as we can."
Aldar sees the "richest pipeline" for investment this year in recurring revenue assets, Mr Fewer said.
Aldar in partnership with Abu Dhabi holding company ADQ expanded into the Egyptian market last year when the consortium acquired an 85.52 per cent stake in Sixth of October for Development and Investment Company for 6.1bn Egyptian pounds ($386.8m).
Earlier this month, Aldar also bought Al Hamra Mall in Ras Al Khaimah in a Dh410m deal.