Aramco seeks to raise over US$10b from property portfolio

[RIYADH] Saudi Aramco is considering plans to raise billions of US dollars from its real estate assets, including a sprawling campus that houses its headquarters in the kingdom’s Eastern Province.

The oil giant has held early-stage discussions on the potential deal and is looking to raise at least US$10 billion, people familiar with the matter said, declining to be identified as the information is confidential. Aramco is considering a sale and leaseback transaction, allowing it to unlock capital while retaining use of its real estate holdings, the people added.

The deal could include the firm’s Dhahran campus in the Eastern Province, a vast community that’s home to thousands of employees. Aramco is working with an adviser on the transaction that’s likely to draw interest from real estate and infrastructure funds, some of the people said.

Such a deal would rank as one of the biggest since Aramco was set up. Last year, a BlackRock-led group signed an US$11 billion lease agreement for facilities that serve Aramco’s Jafurah gas project in the kingdom.

Alongside the property plans, Aramco is also working on other deals, including the sale of a stake in its oil export and storage terminals. That business is particularly significant now with the kingdom rerouting shipments to the Red Sea as the Strait of Hormuz remains effectively closed because of the Iran war.

Separately, the firm is working with an adviser on deals involving its gas-fired power plants and has held early-stage talks on a transaction for its water infrastructure business, some of the people said.

Discussions are ongoing and no final decisions have been made. A representative for Aramco did not respond to a request for comment.

Aramco is the world’s biggest exporter of crude and a linchpin of the Saudi economy. Revenue from energy sales and the firm’s hefty dividend payouts help support the kingdom’s expensive economic revamp, elements of which have been hamstrung by growing costs and conflict in the region.

The firm maintained its dividend at US$21.9 billion for the first quarter. That was lower than free cash flow, or funds left over from operations after accounting for investments and expenses, which came in at US$18.6 billion in the period.

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Its plans are the latest sign that firms are pressing ahead with planned multibillion-US dollar deals despite a conflict that has seen Iran strike oil and gas infrastructure across the Middle East. In Saudi Arabia, Teheran targeted major refineries, oil fields and a pumping station on the crucial East-West pipeline. BLOOMBERG