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Aldar Properties, the Abu Dhabi-based real estate developer, announced on Tuesday it has committed around Dh900 million for various projects as part of a larger Dh3 billion investment plan.
The company said in a statement that it has acquired Daman House, a commercial office building in Abu Dhabi for around Dh330 million. It is also working on the extension of Al Jimi Mall in Al Ain, and expansion within Aldar Academies through the construction of the Al Mamoura School in Abu Dhabi.
The acquisition of Daman House is the first to be made as part of the Dh3 billion investment programme that Aldar is implementing to drive growth and achieve its target of Dh2.2 billion in net operating income by 2020.
The extension of Al Jimi Mall will see Dh410 million invested by Aldar, while Al Mamoura School will see Dh160 million spent on construction.
Saleem Khokhar, head of fund management at the National Bank of Abu Dhabi’s asset management group, said he expected to see a nine per cent yield from the Daman House acquisition.
“I think when you go into difficult markets with a long-term view, you do tend to do well on those investments, so if you have the cash for these investments, that’s when you get the best deals. I think it is Aldar’s long-term strategy to build out recurring revenues, and that’s what they’re homing in on,” he said.
The investment into these three assets, all of which are being funded out of existing cash resources, will contribute roughly Dh90 million to net operating income. The Daman House acquisition is expected to make an immediate contribution to growth, Aldar said.
“If we look at the net debt position for Aldar, it has improved quite significantly over the years, so I think they’re in a good position to start funding these [investments] internally.
I think the way that you would be looking at this is not on a one- or two-year view but more on a 10- to 15-year view and does it make sense in terms of cash flow and return on your investment? And I think the answer is yes,” Khokhar said.
He pointed that with the launch of Yas Mall in November 2014, it was clear Aldar was moving into retail and doing well, so it was sensible to capitalise on other retail outlets like Al Jimi Mall in Al Ain.
The announcement signals a continuation of investment from Abu Dhabi’s state-backed entities at a time when falling oil prices, which reached new lows below $30 (Dh110), are impacting the revenues of GCC governments.
Source: Sarah Diaa, Staff Reporter, gulfnews.com