Dec. 28 (Bloomberg) -- The Abu Dhabi government agreed to buy assets valued at 16.8 billion dirhams ($4.57 billion) from Aldar Properties PJSC, the emirate’s biggest developer, to boost the company’s finances.
The government will purchase 760 residential units in the Al Raha Beach development and retire 5 billion dirhams of debt related to infrastructure on Yas Island, Aldar said in a statement today.
Developers in the United Arab Emirates are struggling to pay down debts after the credit crisis caused property values to plummet and drove speculators out of the market. Home prices in Abu Dhabi, the U.A.E. capital, may drop 30 percent more after declining as much as 55 percent from the market’s peak in mid- 2008, Dubai-based Rasmala Investment Bank Ltd. forecasted in October.
Aldar will receive 4.5 billion dirhams in the next two months as part of the agreement, and the balance will be paid over the next four years, according to the statement. The government also agreed to buy 5.7 billion dirhams of assets in Abu Dhabi’s city center, known as the Central Market.
Aldar, which is building thousands of homes and offices on Abu Dhabi’s Al Raha Beach and Yas Island, agreed in January to sell assets including a Ferrari theme park and convertible bonds to Abu Dhabi’s government for 19.2 billion dirhams to pay creditors. On Dec. 15, the developer said it will convert 2.1 billion dirhams worth of bonds issued to Mubadala Development Co. into shares at 1.75 dirhams each.
Aldar rose 3.7 percent to 84 fils in Abu Dhabi trading today. The stock, which peaked at 13.30 dirhams in June 2008, has slumped 63 percent this year.
--Editors: Ross Larsen, Shaji Mathew.
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