Adnoc, Apollo group sign $5.5bn realty deal
01 October 2020
Abu Dhabi National Oil Company (Adnoc) says it has signed a long-term $5.5-billion real estate investment partnership with a consortium led by Apollo Global Management, one of the world’s largest alternative investment managers.
The strategic investment will leverage the rental income streams from select Adnoc real estate assets under a 24-year master lease agreement. The investment will unlock new pools of global institutional long-term capital for Adnoc, while supporting investment in its core business and strategic growth projects.
In one of the region’s largest real estate transactions, Apollo led a consortium of institutional investors in the acquisition of a 49 per cent stake in Abu Dhabi Property Leasing Holding Company (ADPLHC), a wholly-owned affiliate of Adnoc. The transaction included no financing, and was placed entirely with insurance and pension fund investors that focus on long-term and high-quality investments.
Adnoc will retain a 51 per cent majority stake, maintaining full ownership and control over the select real estate and social infrastructure assets and responsibility for all operations and maintenance.
ADPLHC holds the long-term leasehold interests underpinned by the sizeable, diversified portfolio of assets located across the emirate. The transaction will result in upfront proceeds of $2.7 billion to Adnoc and is expected to close before the year-end, subject to customary closing conditions and regulatory approvals.
Dr Sultan Al Jaber, UAE Minister of Industry and Advanced Technology and Adnoc Group CEO, says: “We are pleased to partner with Apollo and leverage their world-class real estate asset management expertise to achieve international best practice standards in managing and driving cost efficiencies across our real estate portfolio.”
“This strategic partnership allows Adnoc to unlock and monetise significant value from its strategic non-oil and gas infrastructure assets and reinvest into our core business to deliver further growth and realise greater returns.
“The innovative and flexible deal structure ensures Adnoc maintains full ownership and control over its real estate assets, while further strengthening our balance sheet and allowing for greater capital flexibility,” he adds.
For Apollo, the investment presents a unique opportunity to access high-quality lease assets with a superior, risk-adjusted return profile, and lock in long-term, recurring and stable cashflows from a tenant that is one of the world’s leading and most creditworthy energy companies and a portfolio of assets which is expected to achieve strong occupancy and rental rates.
Apollo originated and structured the transaction, drawing upon its ability to navigate complex global market environments and leveraging expertise across its integrated investment platform, including real estate, infrastructure and insurance solutions.
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