Abu Dhabi National Oil Co. (ADNOC) said Sept. 2 it had entered into a $5.5 billion real estate investment partnership with a consortium led by Apollo Global Management Inc.
ADNOC, the state-owned oil company of Abu Dhabi in the United Arab Emirates, said in a statement that the transaction will result in upfront proceeds of $2.7 billion and is expected to close before year-end.
"The strategic investment will leverage the rental income streams from select ADNOC real estate assets under a 24-year master lease agreement," it added.
Under the real estate transaction, which ADNOC said was one of the region’s largest, private equity firm Apollo led a consortium of institutional investors to acquire a 49% stake in Abu Dhabi Property Leasing Holding Company, a wholly owned ADNOC affiliate.
ADNOC will retain a 51% majority stake, maintaining full ownership and control over the select real estate and social infrastructure assets, it added.
"This strategic partnership allows ADNOC to unlock and monetize significant value from its non-oil and gas strategic infrastructure assets and reinvest into our core business to deliver further growth and realize greater returns," ADNOC's CEO Sultan al-Jaber said.
The deal comes as the world's top oil and gas companies, including ADNOC, try to control costs in response to the coronavirus pandemic that has reduced oil demand and prices.
In June, ADNOC signed a $10 billion deal to lease its natural gas pipeline assets to a group of investors, under a newly formed subsidiary ADNOC Gas Pipelines, for 20 years in return for a volume-based tariff.
Four years ago, ADNOC started a transformation strategy to adapt more quickly to market changes, and the company has said it would continue to work with investors to attract foreign capital and maximize value from its resources.
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