Property developer said profits were also helped by strong growth in residential leasing revenues on the back of a successful leasing campaign.
Handovers at Abu Dhabi’s Gate Towers drive Aldar Q2 profit jump
Handover of residential units helped to increase profit at Aldar in the second quarter.
The Abu Dhabi developer’s net profit rose 12 per cent to Dh506 million compared with the first quarter this year. Compared with a year earlier, profit was 168 per cent higher when excluding one-time merger gains. Year-on-year revenue rose 74 per cent to Dh2.19 billion compared with a year earlier.
Aldar’s shares closed down 3.1 per cent at Dh3.65.
Net profit was below some analyst expectations.
“It has more to do with land sales – they did not have as much land sales as expected, as well as delivery of units, which might fluctuate quarter by quarter,” said Harshjit Oza, a property and banking analyst at Naeem Brokerage in Cairo. “I don’t see any catalyst for the stock, but Aldar will see benefits of new project launches [such as Yas Mall] and restructuring of balance sheet from next year.”
Aldar delivered 1,505 units during the quarter, according to Mr Oza, who has a “hold” recommendation on the shares.
Handover of apartments at Gate Towers on Reem Island and growth in residential leasing revenues, especially from the Al Rayyana development close to Abu Dhabi Golf Club, were drivers behind the growth, according to Aldar. About half of the retained residential units at the Gate Tower had been leased.
The company’s commercial portfolio is 86 per cent leased, up from 83 per cent in the previous quarter. It also sold B2 Tower, comprising 202 units, on Reem Island.
Retailers have committed to 95 per cent of shopping space at Yas Mall, which is scheduled to open in November. Among them are Chalhoub Group, which will operate a 200,000 square foot store, and a House of Fraser department store spread over 110,000 sq feet. The mall will also feature Abu Dhabi’s first Hamleys, a British toy store, and the UAE’s first Joe Fresh retail store.
“Looking ahead, we have made a strong start with the new development pipeline, with project launches that have opened up the Abu Dhabi off-plan sales market,” said Mohammed Khalifa Al Mubarak, the chief executive of Aldar Properties.
In April, Aldar launched three new residential developments – Ansam on Yas Island, Al Hadeel at Al Bandar on Al Raha Beach and Nareel Island off the corniche.
The developments have a combined gross value of Dh5bn. The units at Nareel Island are expected to be released in the next quarter.
“Aldar will probably focus more on the residential [sector], which is their core business and where there is a good demand from locals,” said Sebastien Henin, the head of asset management at The National Investor in Abu Dhabi. “Aldar should benefit from an increase in the yields of their investment property portfolio in the coming years and also from a gradual recovery of the demand on the development side.”
During the second quarter, the Abu Dhabi-listed company replaced Dh1.6bn of existing bank loans with new loans with a lower cost and longer maturities.
In May, it repaid a US$1.25bn bond with internal cash and Dh4bn in undrawn bank facilities, the company said.
Following its merger with Sorouh last year, Aldar has reduced its gross debt to Dh10bn, including a Dh1bn reduction this quarter, from Dh14.2bn.
It had cash reserves of Dh3.9bn at the end of June.