Abu Dhabi Extends Property Developer Bailout With $4.

57 Billion for Aldar - Bloomberg

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Abu Dhabi Extends Property Developer Bailout With $4.57 Billion for Aldar
By Zainab Fattah - Dec 29, 2011

Abu Dhabis government extended its bailout of companies hurt by the United Arab Emirates realestate crash, agreeing to buy assets valued at 16.8 billion dirhams ($4.57 billion) from Aldar Properties PJSC. (ALDAR) The government will purchase 760 homes in the Al Raha Beach development and retire 5 billion dirhams of debt related to infrastructure on Yas Island, Aldar said in a statement yesterday. Aldar gained as much as 9.5 percent in Abu Dhabi trading, the biggest increase in a year. Developers in Abu Dhabi and neighboring emirate Dubai are struggling to pay down debts after property prices fell by more than half since the markets peak in 2008. The latest agreement takes the amount of government spending on Aldar, Abu Dhabis biggest developer, to 36 billion dirhams this year. The state also contributed to a $20 billion bailout of Dubai in 2009. Yesterdays agreement demonstrates the support that the government is giving Aldar, but it also brings into question the future business model for the company, said Mohammed Ali Yasin, chief investment officer at CAPM Investment PJSC in Abu Dhabi. Will it continue to be a developer or merely a property-management company for the government? The government will also buy 5.7 billion dirhams of assets in Central Market, a project in downtown Abu Dhabi, and finance the completion of the districts redevelopment. Aldar will receive 4.5 billion dirhams in the next two months as part of the agreement and the rest will be paid over four years, according to the statement. The deal will immediately reduce Aldars debt by 5 billion dirhams.

Ferrari Theme Park

The company has repaid 14.2 billion dirhams in debt this year, including a 4.5 billion-dirham convertible Islamic bond, or Sukuk, on Nov. 10. In January, the Abu Dhabi government paid Aldar 19.2 billion dirhams for assets including a Ferrari theme park and convertible bonds.

http://www.bloomberg.com/news/print/2011-12-28/aldar-agrees-to-sell-some-assets-to-ab... 12/29/2011

Abu Dhabi Extends Property Developer Bailout With $4.57 Billion for Aldar - Bloomberg

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Its definitely better news for debt holders than equity holders, said Ahmed Badr, head of Middle East property research at Credit Suisse Group AG in Dubai. Going forward, there is hardly any business for Aldar except some recurring income from hotels, schools and malls. Combine that with a soft property market and the outlook remains weak. Home prices in Abu Dhabi may drop by an additional 30 percent, Dubai-based Rasmala Investment Bank Ltd. said in October. In Dubai, values have fallen by more than 60 percent since the peak of the market.

Dubai Bailout
State-owned companies including Dubai World ran up debt of at least $129.3 billion transforming the sheikdom into a tourism, trade and financial-services hub. The emirate received a $20 billion bailout from the Abu Dhabi government and the U.A.E.s central bank in 2009. At the time, Dubai World was the parent company of Nakheel PJSC, builder of a palm-shaped island that received about 8.5 billion dirhams. Mubadala Development Co., Abu Dhabis investment arm, agreed in March to provide 3.1 billion dirhams to National Central Cooling Co., known as Tabreed, as part of a recapitalization. The yield on Aldars 10.75 percent dollar bond maturing May 2014 fell 0.02 percentage points to 5.89 percent yesterday, the lowest since Aug. 4, according to prices compiled by Bloomberg. On Dec. 15, Aldar said it will convert 2.1 billion dirhams worth of bonds issued to Mubadala Development Co. into shares at 1.75 dirhams each. The transaction has increased Aldars equity, the company said yesterday. This will have a positive sentiment in the market, leading investors to buy the stock aggressively, said Musa Haddad, head trader at the National Bank of Abu Dhabi PJSCs asset-management group. Aldar was up 8 fils at 92 fils as of 11:42 a.m. Before today, the shares had fallen 64 percent this year, more than double the Bloomberg EMEA Real Estate Indexs (BEUREAL) 25 percent drop. Aldar has a market value of 2.65 billion dirhams. To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net. To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.
2011 BLOOMBERG L.P. ALL RIGHTS RESERVED.

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