Aldar repays $1.25bn bond, slashes interest payments

Overall cost of borrowing has fallen 70 per cent from Dh1 billion a year to Dh300 million the Abu Dhabi company said.

The Ansam development is one of three new residential developments to be launched by Aldar Properties in Abu Dhabi. Rendering courtesy Aldar
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Aldar Properties has repaid a US$1.25billion bond helping the Abu Dhabi based developer to slash annual interest payments by Dh700 million compared with last year.

The bond, which matured at the end of May 2014 and which carried an initial annual interest cost of 10.75 per cent was repaid using company cash reserves and existing loan facilities which carry an annual interest cost of 1.7 per cent, Aldar said in a statement today.

Aldar’s overall cost of borrowing has fallen 70 per cent from Dh1 billion a year to Dh300 million the company said while its weighted average cost of debt has fallen has fallen from 5.8 per cent before the bond repayment to 2.8 per cent.

Aldar was hit hard by the global financial crisis when property prices in the capital fell by as much as half prompting agencies such as Moody’s to downgrade its ratings status to “junk” in 2010 and pushing up its cost of borrowing as investors feared for the safety of their cash.

However, since then the company’s outlook has improved steadily, benefitting from major asset sales to the Abu Dhabi Government, a government endorsed merger with rival property company Sorouh and a recent uptick in the Abu Dhabi property market.

Aldar reported yesterday that since completing its merger with Sorouh in June last year, the company has reduced its gross debt from Dh14.2bn to Dh10.1bn.

At the end of May this year Aldar said it held cash worth Dh3.8bn and Dh 40.7bn worth of assets, including 77 square miles of development land.

“Our strategy to continue deleveraging the business and reduce the company’s annual interest payment is well advanced,” said Greg Fewer, Aldar’s chief financial officer. “Thanks to our refinancing initiatives the company will now pay Dh700 million less annually to service our debts - a reduction of 70 per cent over just one year. We continue to remain focused on deleveraging the business and optimising our cost of capital.”

Last month Aldar returned to the off plan sales market after an absence of four years as the company announced three new projects in Abu Dhabi worth a total of Dh5 billion.

The company plans to start selling off plan flats at its Ansam project – its first major apartment scheme on Yas island – on Saturday.

Aldar added that it was assessing 20 other development projects in Abu Dhabi emirate and plans to launch at least two new schemes every six months.

lbarnard@thenational.ae

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