PROPERTY Aldar buys prime office tower for Dh658m
Aldar Properties has acquired International Tower, a prime office building in Abu Dhabi, in a Dh658 million (US$179m) deal as the emirate’s biggest publicly-traded real estate developer looks to boost its commercial portfolio and strengthen recurring revenues.
“With a strong mix of existing tenants, this grade-A office tower will make an immediate contribution to net operating income, in line with our strategy to grow recurring income from our portfolio of high-quality assets,” Talal Al Dhiyebi, chief executive of Aldar Properties, said in a statement yeterday to Abu Dhabi Securities Exchange (ADX), where its shares are traded.
“Supported by our strong balance sheet, we will continue to assess the market for opportunities that will further drive growth of our portfolio,” he said, without specifying how the developer will finance the acquisition.
Since the 2008 property crash, which saw the value of properties more than halve in some parts of the country, UAE developers have been trying to build portfolios of residential and commercial properties, yielding leasing income to shield themselves from sudden price fluctuations.
Aldar, which in recent quarters has started balancing its portfolio with affordable properties, is firmly focused on building its asset management business.
Recurring revenues accounted for about 50 per cent of the total revenue in the first six months of this year, Mr Al Dhiyeb said in September. The company wants to build and hold residential, commercial, hospitality, retail, educational assets, while looking for opportunities to buy income producing assets, he said at the time.
The acquisition of International Tower, which comprises 39,000 square metres of net leaseable area rented to existing tenants, increases the size of Aldar’s office portfolio by 19 per cent to more than 240,000 square metres, according to the company.
The tower is located in the Capital Gate district of Abu Dhabi – a prime mixed-use area, home to numerous private and public sector organisations including McKinsey & Company, BAE Systems, Aecom, Wood Group and Abu Dhabi Systems & Information Centre, as well as hospitality outlets and the Abu Dhabi National Exhibition Centre.
Rents for grade-A office stock in Abu Dhabi held up in the third quarter of 2017, with flat year-on-year growth despite challenging real estate market conditions that saw residential rents plummet in many areas of the capital, according to consultancy JLL’s latest Abu Dhabi market view.
In November, Aldar reported a 20 per cent drop in its third quarter profit as gains from property sales recorded during the the same quarter of 2016 were not repeated.
Aldar also achieved Dh604m of development sales during the quarter, including the first phase of its new residential project, Water’s Edge. The company has a Dh18bn portfolio of real estate assets across the retail, residential, office and hospitality sectors.