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Aldar Properties PJSC has signed an agreement to divest its two district cooling assets on Abu Dhabi’s Saadiyat Island to National Central Cooling Company PJSC (Tabreed) for a total consideration of AED 963 million.
Aldar had purchased a 100% stake in Saadiyat District Cooling LLC (SDCL) and an 85% stake in Saadiyat Cooling LLC (SCL) as part of a wider acquisition of assets from Tourism Development and Investment Company (TDIC) in 2018.
The transaction is expected to complete in the first quarter of 2021, unlocking an internal rate of return of over 40% on the original equity investment by Aldar, who has actively managed the asset since its acquisition in 2018. Proceeds will be used to finance further growth of Aldar’s diversified portfolio of high-quality income-generating property.
Talal Al Dhiyebi, Chief Executive Officer of Aldar Properties, said: “We are pleased to be deepening our long-standing relationship with Tabreed with this win-win transaction. This divestment crystalizes significant value for Aldar shareholders and is a clear example of our strategy for value creation in action. Aldar is pursuing attractive acquisitions, implementing an active approach to asset management and continuously recycling capital to invest in future growth. In line with this strategy, Aldar will build on its strong financial and operating performance in 2020 by further deploying capital in the long-term growth of our two core real estate businesses – Asset Management and Development Management.”
Commenting on the agreement, Bader Saeed Al Lamki, Tabreed’s Chief Executive Officer, said: “I am delighted to be signing this agreement today, as we continue to accelerate our growth trajectory and consolidate our position in the UAE. As an industry leader, our strategic partnerships have allowed Tabreed to grow into an international powerhouse in district cooling, with over 22 years of experience and investments across six countries. Our partnership with Aldar is one such example, and this transaction is testament to the strong relationship we enjoy with them. Moving forward, we are well placed – both financially and operationally – to continue to take advantage of further growth opportunities in the UAE market and beyond.”
SDCL and SCL provide district cooling to Saadiyat Island in the UAE’s capital, Abu Dhabi, which is home to the Louvre Abu Dhabi and developing rapidly into a major cultural and tourism centre. Aldar is developing premier residential and mixed-use destinations on Saadiyat Island, including Al Mamsha and Saadiyat Grove, and owns extensive plots of infrastructure-enabled prime land on the island for future development.
In 2019, the Abu Dhabi Department of Energy (DoE) issued the District Cooling Regulations and the District Cooling Applicability Regulations, becoming the first regulatory authority in the MENA region to set up a complete integrated system for district cooling. Both SCL and SDCL will be the first District Cooling schemes to receive the new license in Abu Dhabi, supporting the DoE’s commitment to taking the lead in the regional and global energy sector, and its focus on developing infrastructure, ensuring energy efficiency, and promoting sustainable solutions.
This is the latest major transaction by Aldar this year. The company signed an agreement with ADQ, an Abu Dhabi holding company, in late November to manage over AED 30 billion of capital projects. That deal significantly increases Aldar’s fee-based third-party development management business, which is also working on government contracts to manage an upgrade of infrastructure on Saadiyat Island and in the Mina Port area of Abu Dhabi.
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