Mubadala Real Estate looks to part sell UAE assets

Mubadala Real Estate and Infrastructure, the property investment arm of Abu Dhabi’s strategic firm Mubadala Investment Company, is looking to monetise UAE assets through partial sales or launching a real estate investment trust (Reit) after it finishes a portfolio valuation process this year, a senior company executive said.

“It may be a partial sale to third-party private sector investors or we list them [assets] on a Reit,” Ali Eid Al Muheiri, executive director of the firm told The National at Cityscape Abu Dhabi. "In 2019, we will be in a position to decide how we are going to monetise our assets.”

Mubadala Real Estate has had informal discussions with potential investors and hasn’t yet done a “market-sounding exercise”. The initial response for partial sales has been very positive, he noted.

Parent company Mubadala, which has more than 50 investments worldwide and manages assets worth $225 billion (Dh826bn), invests on behalf of the Abu Dhabi government through four specialised investment platforms including an alternative investment and infrastructure unit.

Mubadala Real Estate and Infrastructure, created four years ago, is the developer behind Abu Dhabi’s Al Maryah Island, which is home to Cleveland Clinic and Abu Dhabi Global Market, the capital's onshore financial hub.

The company’s portfolio of investments include stakes in Aldar, the biggest-listed developer in Abu Dhabi, Aabar Properties, Dubai-listed contractor Arabtec Holding, Four Seasons Abu Dhabi, Rosewood Abu Dhabi, Viceroy Hotels Group and Sorbonne University Abu Dhabi among others.

If part selling is chosen as a route of exit, the company would invite both global and wider Middle East and North African investors to buy equity stakes in the vehicle that are running the assets, he noted.

“So whether you buy an asset in Abu Dhabi or in New York it has to make commercial sense. That’s the way people are looking at it,” he said. “For example, our commercial assets have been leased for five-to-six years, with stable income and stable growth. People understand this.”

The move to divest assets is aimed at creating a more balanced portfolio and increase the firm’s exposure to more mature and less risky markets, the executive said.

“I’m very heavy in the UAE and I’m very light in the international market. So I would like to reduce my UAE exposure and increase my international exposure from a risk perspective,” Mr Al Muheiri explained.

However, if the company chooses a Reit after the valuation process, it would first include a small component of its commercial portfolio and over time include residential, then retail and eventually hospitality assets into the investment vehicle, he said, declining to give the size of a potential Reit.

“Once we do the valuation we are going to see what are the pros and cons of doing a Reit or … a partial sale,” he said. “The positive thing is that people are starting to recognise that there is value in doing Reits because historically there wasn’t [any in the region].”

Reits are listed funds that own income-producing commercial real estate and are legally obliged to distribute a proportion of their income, usually 80 or 90 per cent, as dividends to shareholders.

The company last year said it is looking to form partnerships with developers to build future projects in the UAE. Mr Meheri said the talks for potential tie-ups are nearing conclusion and the firm will soon announce a deal, which could either be a joint venture or sale of a land plot.

“The good thing is that the momentum we saw in 2018 has flowed into 2019. So we don’t have people walking away [from deals],” he said.

Mubadala Real Estate, which has already invested in properties in the US, Europe and Asia, is looking to further strengthen its income-yielding portfolio of assets. In the US, the company is looking to snap up assets in Washington DC, New York, Los Angeles and San Francisco, while London, Munich, Berlin, Frankfurt and Paris are on its radar in Europe. In Asia, where it already has made an investment in the logistics sector, Mubadala Real Estate is eyeing destinations including Beijing, Shanghai, Hong Kong and Singapore.

“Our next challenge is to grow those investments,” Mr Al Muheiri said. “There’s never a lack of properties to invest in, but what we want to do is to be a smart investor ... more importantly, create a well balanced portfolio that can be a cornerstone for Mubadala. This is the end goal.”