Aldar ‘confident’ of doubling market cap within five years 

Supplied

• Interview with group CEO
• Overseas expansion key
• First UK acquisition last month

Abu Dhabi developer Aldar Properties is ramping up an international expansion drive that, alongside plans to grow its UAE portfolio, will help to double its market cap, its group chief executive said. 

Aldar’s market cap is currently $12 billion, and group CEO Tilal Al Dhiyebi foresees “doubling that in five years,” he told AGBI in an exclusive interview, adding: “I’m confident the team will be able to deliver.”

The company’s strategy hinges on acquiring or partnering with developers and other investors in markets such as the UK and Europe, and creating specialised vehicles, including in the fast-growing private credit space, Al Dhiyebi said.  

• Aldar joins Mubadala and Ares to invest in Europe real estate
• UAE’s Aldar buys British developer for $291m
• Aldar nets $844m in sales from Dubai project sell-out

In November Aldar completed its first acquisition outside the Middle East and North Africa, of the London-based property developer London Square, for AED1.07 billion ($291.4 million). 

Private credit focus

This week the company announced a partnership with the Abu Dhabi sovereign wealth fund, Mubadala, and the US-based asset manager Ares to invest a combined $1 billion in private real estate credit opportunities in the UK and Europe over the next three to five years. 

Private credit is a form of non-bank lending. It has grown rapidly as traditional lenders retreat from certain types of lending in volatile market conditions. Real estate is one sector deemed risky in the current high interest rate environment.  

Globally, private credit is projected to grow by 60 percent, from $1.4 trillion at the start of this year to $2.4 trillion by 2027, according to Bloomberg.  

Aldar will invest $300 million into the new vehicle, taking a 30 percent stake alongside Mubadala’s 50 percent and Ares’ 20 percent, the company said in a filing to the Abu Dhabi Securities Exchange. 

Additionally, Aldar will invest $100 million into a European private real estate credit vehicle established by Mubadala and Ares in 2021.

Aldar is targeting more deals like this, Al Dhiyebi said: “Private credit has become such a big theme for capital managers globally, and an increasingly important part of real estate finance in mature markets. 

“We think Aldar has the opportunity not only to provide credit solutions, given our strong capital base, but also our broad real estate experience and sustainability focus.” 

Private credit would be offered to real estate investment trusts and others that “for one reason or another are struggling to access conventional debt”, Al Dhiyebi said. “There are also alternative funding platforms where we can come in and offer solutions alongside the bank.” 

‘A unique opportunity’

The UK and Europe will be Aldar’s target in the short to medium term.

“The UK is one of the most attractive, lucrative and sought-after real estate markets in the world, especially London,” Al Dhiyebi said. 

“This cycle, with its macroeconomic headwinds of inflation, high interest rates and lower GDP forecasts, has put pressure on property and banking, and presents us with a unique opportunity to enter the market. Local players are looking for partners and new ways to grow.”  

The company would consider both distressed and high-performing assets: “The question is, can you do more with it?” 

Aldar aims to set up a real estate investment trust for logistics property: “Everything from warehouses to last-mile delivery to self-storage, which is becoming very popular again in Europe.”

The developer’s third-quarter revenue grew 18 percent year on year to AED1.9 billion ($520 million), while net profit rose 48 percent to AED900 million.  

Al Dhiyebi predicts continued growth in 2024, driven in part by new partnerships in the UAE.

The company expects to break ground on its first Dubai homes next year as part of a tie-up with Dubai Holding, and this autumn it announced its debut in Ras Al Khaimah. 

But overseas expansion is what will really drive its growth, Al Dhiyebi said: “Over the past decade, locally driven sector champions in the UAE have gained the ability to go outside and be just as competitive. This has happened to us.

“We’ve ventured into Egypt [starting with the 2021 majority acquisition of Sixth of October for Development and Investment, with Abu Dhabi’s ADQ]. We’ve recently ventured into the UK. We’re venturing into other emirates. 

“We have built a really strong base – a diversified and resilient business in a cyclical sector – and now have something to give to other markets.”