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Tecom Group greenlights AED 1.7 bn investment plan: Business district developer Tecom Group approved yesterday an AED 1.7 bn strategic acquisition and development plan, it said in a DFM disclosure (pdf). The plan will see Tecom invest AED 966 mn to acquire commercial and industrial assets from Dubai Holding Asset Management, and earmark AED 689 mn to develop Grade A offices in Dubai Design District (d3), slated for handover in 2028.
The breakdown of office space and industrial land acquired from Dubai Holding Asset Management:
- The AED 420 mn acquisition of two Grade A office buildings in Dubai Internet City;
- The AED 410 mn purchase of 13.9 mn sqft of “strategically located, well-connected” industrial land plots via Tecom subsidiary Dubai Industrial City;
- The AED 136 mn acquisition of 629k sqft gross floor area (GFA) within d3’s Design Quarter — a mixed-use development located in phase 2 of the creative district — via its subsidiary Dubai Design District.
The rationale: The move comes on the back of robust demand for office spaces and industrial assets in Dubai, with occupancy levels at 93% in 4Q 2023 (We have more on demand in both sectors of the property market in our Real Estate section, below). Tecom’s business districts saw an average occupancy rate of 91% in 1Q 2024, with d3 at 98%.
Tecom plans to leverage its “healthy cash profile” to fund its strategy, after posting a 15% y-o-y rise in net income to AED 293 mn in 1Q 2024, and a 10% y-o-y top-line improvement to AED 564 mn. The group also has the option to draw up to AED 3.2 bn from an existing revolving credit facility refinanced in 2023, it said in the disclosure.
Expected financial impact: Tecom forecasts immediate improved earnings from the two fully leased operating office assets in Dubai Internet City. The remaining acquisitions are also expected to improve revenue by attracting new customers.
OTHER INVESTMENT NEWS-
DP World has inaugurated EUR 130 mn in investments at three sites in Romania, according to a press release. The upgrades are expected to boost cargo volumes by some 2 mn tonnes a year, strengthening trade links between the Black, North, and Adriatic seas, and mainland Europe. The move will also exploit synergies with DP World’s in-place network of maritime, rail, barge, and trucking services, the statement said.
The breakdown:
- EUR 65 mn went towards two new facilities at Romania’s Constanta port — the largest container port on the Black Sea — including a 5-hectare cargo terminal catering to heavy, large, and complex cargo, and a roll on/roll (RoRo) off terminal;
- Another EUR 50 mn investment went towards a new multi-transport platform at Constanta that is slated to open next year;
- Some EUR 21 mn is allocated to an 8-hectare intermodal logistics hub in Aiud, providing links between road and rail routes that are in close proximity to Romania’s industrial hub.
