UAE’s Largest Developer on the Prowl for Assets to Boost Income

Aldar Properties PJSC is looking into buying assets that would boost its management units as the largest listed developer in the United Arab Emirates aims to take advantage of strains in the market.

“Times of crisis and dislocation always give rise to opportunities for corporate action or combination,” Chief Financial Officer Greg Fewer said on a conference call Thursday. “When you’re a landlord, the cost of capital is one of your most important attributes. We have the lowest cost of capital.”

UAE developers often suffer from slumping demand for properties when oil prices are low and job creation lags. Growing their asset management businesses helps secure a steady stream of income at times of market downturn.

Aldar, which primarily operates in Abu Dhabi, has the benefit of a stronger market in the UAE capital compared with neighboring emirates. Oversupply in Abu Dhabi is less severe than in Dubai, where a six-year slump has driven values lower by 30%.

Last month, a rally in Aldar shares on the back of a deal with a state-owned entity in Abu Dhabi took its market value past Burj Khalifa developer Emaar Properties PJSC.

UAE’s Largest Developer on the Prowl for Assets to Boost Income

On Thursday, Aldar’s CFO refused to specify which assets the company is looking to acquire.

But he said the company would be assessing opportunities in the kinds of “assets we have competency to manage and therefore grow.” That includes commercial offices, residential properties and schools.

Abu Dhabi sovereign wealth fund Mubadala Investment Co. was considering selling the Galleria Mall on Al Maryah Island as well as the city’s financial district to Aldar, Bloomberg reported in June, citing people with knowledge of the matter. Mubadala may also dispose of some residential buildings in the UAE capital, they said.

Aldar is “very efficient in terms of our ability to operate across multiple asset classes, which is a very unique feature in terms of scale” whether it’s schools, offices, homes or hotels, Fewer said.

This is a “great attribute to be having at a time” when owners of real estate seek efficiencies across their portfolios, he said.

©2020 Bloomberg L.P.

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