Saadiyat Island is now one of Abu Dhabi's most prominent destinations. Apart from its many landmarks, it is also host to a sizeable residential community. Image Credit: AFP

Dubai: Abu Dhabi's Tabreed has bought the district cooling assets on Saadiyat Island from Aldar Properties, the master-developer, for Dh963 million. This is the second such deal Tabreed has had this year, having earlier this year bought a sizeable stake in the district cooling capacities at Dubai's Downtown from Emaar.

Saadiyat hosts the Louvre Abu Dhabi, NYUAD and Manarat Al Saadiyat, as well as sprawling residential communities under the Aldar portfolio.

In fact, Aldar itself had purchased a 100 per cent stake in Saadiyat District Cooling and an 85 per cent stake in Saadiyat Cooling LLC (SCL) as part of a wider acquisition from another Abu Dhabi master-developer TDIC (Tourism Development and Investment Company) in 2018. Tabreed now picks up both these entities.

The financing of these will be done through the $500 million bond Tabreed issued in October, which has a seven-year tenor.

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Unlocking value

The transaction is expected to complete in the first quarter of 2021, and which should unlock an "internal rate of return of over 40 per cent on the original equity investment by Aldar," the developer said in a statement. Proceeds will be used to finance further growth of Aldar’s portfolio of "high-quality income-generating property".

Talal Al Dhiyebi, CEO of Aldar Properties, said: “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."

Expanding reach

For Tabreed, it’s a year of massive deal making. The one with Emaar was for Dh2.48 billion, and which led to it taking out 80 per cent of Emaar’s district cooling entity at the Downtown Dubai. It has been rated as among the biggest deals ever in the sector.

Tabreed thus is involved in two of the biggest deals that took place in the UAE in either half of this year.

"We continue to accelerate our growth trajectory and consolidate our position in the UAE," said Bader Saeed Al Lamki, Tabreed’s CEO. “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.

“We have consolidated our position of being the largest district cooling entity in Abu Dhabi. There are still a couple of major opportunities in play, most likely in Dubai. But we have not made a decision on those yet.”

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Solid gains

The company recorded a third quarter net profit of Dh370 million, a 13 per cent increase year-on-year. Total revenues too were up - by 12 per cent to Dh1.25 billion. It was thus one of the few publicly listed local companies to see gains on both scores.

The latest deal further consolidates its capacities within the UAE, where at the end of September it was handling 1.352 million RT (refrigerated tonnes) in the UAE and outside. It has a presence in all the other Gulf markets except for Kuwait.

New extensions

India and Egypt remain the top priorities in any external push. Tabreed now has an office in Delhi, “a sort of boots on the ground,” said Al Lamki. “India is a market that would be hugely relevant to us in future. We have the strong backing of investors to tap outside opportunities. It’s now a question of finding the right ones.”

We are well placed – both financially and operationally – to continue to take advantage of further growth opportunities in the UAE market and beyond

- Bader Saeed Al Lamki of Tabreed