Shareholders Okay TECOM’s Acquisition of “Office Park” Building
Decks have been cleared for TECOM Group, Dubai’s business park operator, to acquire “Office Park” building in the tech hub of Dubai Internet City from Emirates REIT for $196.02 million following the approval of the transaction from the shareholders of the latter.
TECOM Group on Wednesday said that it has signed a signed a binding memorandum of understanding (MOU) between TECOM lnvestments FZ LLC (a subsidiary of TECOM Group), and Emirates REIT, for the acquisition of “Office Park” building. As part of a larger portfolio restructuring, Emirates REIT had planned to sell off a portion of its holdings a few days ago.
The deal was subject to the approval of the transaction by the shareholders of Emirates REIT, who cleared the proposal in an Extraordinary General Assembly (EGM) held on Tuesday, TECOM Group said in a regulatory filing with Dubai Financial Market (DFM) this morning.
Accordingly, both parties will proceed with all formalities to close the acquisition process, Tecom Group said. The deal is part of the DFM-listed company’s massive investment program that includes the purchase of the multi-let commercial asset – “office Park” – building.
“Office Park” is made up of five connected blocks in an L-shape, and has a gross leasable area of 370,761 sq. ft. The property was extensively refurbished recently and has an 88% occupancy rate, including leading international companies such as Coca-Cola, Uber, Red Hat, and Ticketmaster as tenants of the building.
Previous Investments
It may be recalled that the TECOM Group has announced in May this year that the company will be investing up to $460 million to expand its office and commercial real estate holdings in locations such as Dubai Design District (d3), Industrial City, and Internet City.
The expansion plan will involve TECOM Group investing $263 million to acquire commercial and industrial assets from Dubai Holding Asset Management (DHAM) and earmarking $187.58 million to develop grade A Offices in d3.
These strategic acquisitions are in line with the Group’s clearly defined roadmap to achieve sustainable growth and continue delivering strong performance through strengthening its portfolio of flexible and high-quality commercial and industrial assets as a result of tapping into new sources of sustainable growth.
The investment plan will enable the Group to further cement its leading position in developing integrated business ecosystems and enabling growth across key strategic sectors within Dubai. It will also seek to unlock greater returns for shareholders over the mid to long-term.
According to local media reports, the Grade A and Grade B office buildings in Dubai are currently experiencing a sharp increase in rental income in addition to a dearth of available new space. This is also the reason for the significant expenditures made in properties that are ready and have a stable tenant base.
TECOM Group has also launched plans to develop Innovation Hub Phase 3 — worth $92.5 million in Dubai Internet City, as well as the Phase 2 of Dubai Design District (d3) with six Grade-A office buildings spanning 58,000 sq. m.
