By Ed Attwood
Abu Dhabi government buys 760 units at Al Raha Beach project, plus city centre development
Troubled developer Aldar has announced that it has closed a series of agreements with the Abu Dhabi government that will allow it remove $4.6bn from its debts.
The deals include unit sales, asset transfers and reimbursements. The proceeds from the transactions will be transferred over a four-year period, although the company has said it expects to receive around $1.2bn of the sum within the next two months.
In statement released on Wednesday, the developer announced that Abu Dhabi government had bought 760 units in Aldar’s Al Raha Beach development for $953m.
The government has also agreed to reimburse Aldar $1.4bn towards “existing and to be completed infrastructure assets at Al Raha Beach”. That sum will be removed from an existing government loan to the company.
Elsewhere, existing assets at Aldar’s Abu Dhabi city centre redevelopment project – known as Central Market – have also been bought by the government at a cost of around $1.6bn.
Aldar will continue to work on the Central Market project, although the estimated completion costs of $709m will now be met by the government.
“With a substantial land bank across Abu Dhabi, Aldar is well placed to capitalize on future development opportunities based on demonstrable market demand,” said Aldar chairman Ali Eid Al Mheiri.
“Aldar will also benefit from sustainable recurring revenues from our office, retail, hotel and education assets, as well as development management fees from large scale third party projects.”
The state-backed developer has already sold key assets to the Abu Dhabi government in the past, including the Formula One circuit on Yas Island, and the Ferrari World theme park.
In January, Aldar was bailed out by Abu Dhabi via a $5.2bn rescue package which saw it sell convertible bonds to Mubadala, plus the sale of assets.
$953 million divided by 760 apartments makes them worth more than $1.25 million each.That is way too much for apartments in that location in a declining market.