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Abu Dhabi, UAESaturday 15 December 2018

Aldar fourth quarter profits fall 80 per cent on asset management charge

Real estate firm says development sales hit Dh1.2 billion for the quarter

The Ansam development on Yas Island. All Abu Dhabi tenants are subject to the municipal fees. Courtesy Aldar
The Ansam development on Yas Island. All Abu Dhabi tenants are subject to the municipal fees. Courtesy Aldar

Aldar Properties, Abu Dhabi’s largest real estate developer, reported an 80 per cent plunge in fourth quarter profits on a one-time charge related to its asset management business, against a backdrop of falling property prices in the capital.

The developer’s profit attributable to shareholders fell to Dh144 million for the three months to the end of December, compared with Dh744m for the fourth quarter of 2016. NBAD Securities had forecast a net income of Dh630m for the period, with EFG-Hermes predicting Dh605m.

Aldar said the drop in profits was due to a Dh495m charge, representing 3 per cent of its asset management portfolio. The company didn't provide further details on the charge.

Revenues for the quarter meanwhile rose 32 per cent to Dh1.9bn, coming in ahead of NBAD Securites and EFG-Hermes estimates.

The company's plunge in profits was exacerbated by average apartment and villa sales prices in Abu Dhabi falling 10 per cent and 4 per cent year-on-year in 2017, according to real estate consultancy Asteco, in line with economic trends, job cuts and reductions in staff housing allowances.

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Annual profits for the developer fell 28 per cent to Dh2 billion from Dh2.8bn in 2016, well below an average estimate of Dh2.4bn from analyst forecasts compiled by Bloomberg.

Revenues for the year slipped 1 per cent to Dh6.2bn. The developer said that development sales hit Dh3.5bn for the year across 1,900 units, ahead of guidance for the year. This included Dh1.2bn of sales in the fourth quarter, driven by Aldar's Water’s Edge and West Yas projects on Yas Island.

The company proposed a 12 fils per share dividend for the year, compared with 11 fils for 2016.

“We have bold plans for 2018 - exciting development launches and seeking opportunities to grow our portfolio in existing and new markets,” said Aldar CEO Talal Al Dhiyebi.

“With solid foundations, an extensive land bank, deep industry experience and an enviable portfolio of assets, Aldar is well positioned to achieve its strategy to deliver desirable destinations in Abu Dhabi in 2018 and beyond.”

The developer’s chief financial officer Greg Fewer said that the company’s board will recommend raising the foreign ownership limit to 49 per cent from the current level of 40 per cent.

Aldar has a capex outlay of $1.54bn (AED5.4bn) for the next two years, following a capex outlay of around Dh1.6bn last year, said Mr Fowler, speaking to journalists on a conference call on Thursday.

The company is also considering the refinancing of a $750 million sukuk due this year, he added.