Abu Dhabi's two biggest developers said sales fell in the first quarter as apartment handovers slowed ahead of the expected merger of the companies next month.
Aldar recorded a 55 per cent drop in quarterly revenues from a year earlier as land sales declined. Sorouh said sales fell 35 per cent over the same period after it handed over most of the units at its Sun & Sky development last year. The first two phases of its national housing project Watani are approaching completion.
Aldar's shares closed 3.3 per cent lower to Dh1.45, while Sorouh lost 1.6 per cent to Dh1.85.
Analysts said weaker revenues were expected as the two companies shed excess weight ahead of the June tie-up.
"These businesses are in transition," said Mohammad Kamal, a property analyst at Arqaam Capital in Dubai. "Aldar as an operator of recurring income assets, and hence the drawdown of property assets and land sales, and Sorouh as a national housing project developer."
Aldar's revenues fell to Dh1.62 billion, from Dh3.58bn a year earlier. Net income at Abu Dhabi's biggest developer declined 68 per cent to Dh154.3 million.
Sorouh's revenues fell to Dh632.2m in the quarter, compared with Dh967.2m last year. Net income rose to Dh101.6m from Dh83.6m, bouyed by its investment portfolio and the reversal of some provisions made on completed projects.
"We reversed some of the contingencies we had on the Sun & Sky Towers," said Sorouh's chief financial officer Richard Amos. "We always keep some contingencies back even when we release a project in the end, in case there are unforeseen costs, if anything comes up, or repair needed."
Sorouh expects three more developments to approach delivery, including the 35,00-apartment Gate Towers in Shams.
It emerged earlier this year that the Abu Dhabi Government was seeking to develop schools, roads and infrastructure works amid a Dh330bn spending spree over the next five years.
"Once you have a business listed as AldarSorouh Properties, once the balance sheet is combined, and the liquidity, execution and synergies in place, then we can discuss mandate," Mr Kamal said.
The introduction of the Abu Dhabi World Financial Market free zone on Al Maryah is expected to boost lettings for the area formerly known as Sowwah Island.
"There will be a multiplier for the surrounding developments," Mr Amos said. "There will be more investment in Sowwah Square and that'll have a spillover effect on Reem Island, including Shams, where we have our Gate."
Aldar and Sorouh have set up integration committees with representatives of both companies involved to ensure the transition runs smoothly.
Sorouh said it will kick-start a revaluation of its assets, as part of International Financial Reporting Standards accounting requirements, known as purchase price allocation.
"All assets of Sorouh have to be taken on Aldar's balance sheet on fair value," Mr Amos said. "We will go through another valuation exercise to value the properties and land bank. Management has to take the responsibility. We are being advised by an accounting firm, and then the auditors take another look. There are significant checks and balances in this process."
A headhunting firm has been appointed to find a suitable chief executive for the enlarged developer.
Sorouh also said it expected its shares to be suspended from the Abu Dhabi Securities Exchange five days before the merger to allow enough time for shares of Aldar to be allocated to its shareholders.