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UAE’s Aldar Properties creates new subsidiary with Dhs20bn assets logo 12/09/2018 Aarti Nagraj
Aldar Properties Al Raha Beachside Development © Motivate Publishing Aldar Properties Al Raha Beachside Development

Abu Dhabi’s largest developer Aldar Properties is spinning off its recurring-revenue assets worth Dhs20bn ($5.4bn) into a new, fully-owned subsidiary as it seeks to achieve operational efficiencies and raise cheaper capital.

The state-linked builder of Abu Dhabi’s Formula One circuit said on Wednesday the subsidiary, Aldar Investment Properties, will take ownership of some of Aldar’s highest revenue-generating assets. The new company follows the recent Abu Dhabi decree granting full onshore real estate ownership rights to Aldar Properties and its subsidiaries in the capital of the United Arab Emirates.

Read more: Aldar says subsidiaries can now own Abu Dhabi real estate

“It’s an evolution that brings a new degree of operating capital efficiency. And by focusing (on) our recurring revenue assets legally and financially, we can raise capital cheaper,” Greg Fewer, chief financial officer, Aldar Properties told Reuters.

Aldar Investments has been assigned a Baa1 rating by Moody’s, a notch above Aldar’s, and plans to issue new, benchmark sukuk, or Islamic bonds, shortly, he said. Aldar Properties has hired banks to arrange a U.S. dollar-denominated sukuk issue of at least $750m, sources told Reuters on Monday.

“The new sukuk will be linked to the existing sukuk,” Fewer said, without elaborating further. Aldar Investments will have its own board. The existing asset management team of Aldar Properties will be part of the new subsidiary, he said.

Aldar Investments, incorporated at Abu Dhabi Global Market (ADGM), the financial free zone of the emirate, will also actively assess opportunities to expand its asset base beyond traditional real estate asset classes.

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