Abubaker Seddiq Al Khoori says he is sleeping much better than he was a year ago.
“It was very hectic,” the Aldar chairman says of the megamerger between Abu Dhabi’s two biggest developers, which dominated the headlines 12 months ago. “Everyone worked day and night and we were pleased to finish it.”
It certainly appears that the new Aldar picked the right man for the job of not only masterminding the merger with Sorouh (where Al Khoori had previously been managing director), but also keeping the developer’s project pipeline on track, as well as completely revamping Aldar’s bottom line.
By any assessment, the turnaround in Aldar’s fortunes has been remarkable. Back in 2011, beset by a growing pile of debt, a $3.44bn loss in the previous year and a 50 percent drop in property values in the UAE capital, the developer was forced to accept two government bailout packages worth almost $10bn. As part of those deals, Aldar issued bonds and sold assets — including housing and retail space, as well as the Ferrari World theme park and the Formula One circuit on Yas Island — to the Abu Dhabi government. In addition, state investment vehicle Mubadala raised its stake in Aldar from 19 percent in 2009 to 54 percent in 2011 — although that has since tracked back down to 39 percent by the end of 2013.
Since the dark days of 2011, the outlook has improved considerably. Along with the Abu Dhabi property market’s return to growth, Aldar has also benefitted from healthy cashflow from government transactions, which will amount to $1.24bn in 2014. But the biggest contribution has come from the merger with fellow developer Sorouh, which has created the third-largest listed developer in the Gulf, and allowed Aldar to refinance “most if not all” of the $3.96bn worth of debt it had accrued as a result of the financial crisis. It has also ensured that the new company now has the largest land bank in the UAE, with 77 million sq m of mostly infrastructure-enabled land.
“By the time we announced the merger, we knew we would have to refinance about $3bn within 18 months, and that, by itself, was not a small challenge,” says Al Khoori, with impressive understatement. “That’s why we started talking to the banks and convinced them to start reducing their fees on existing loans before we even went and started refinancing.”
The merger between Abu Dhabi’s two largest developers took six months, considerably less time than the consultants the companies had hired to advise on the deal had estimated. Al Khoori says that the process was helped by setting up 17 separate workshops between the two entities even before the merger talks had been fully concluded, allowing the teams to get a headstart.
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