Dubai: Merger synergies (flowing from the Sorouh deal) and an active project portfolio came together to propel Aldar Properties to a net profit of Dh2.25 billion for 2013, up 67 per cent from a year ago. Fourth quarter returns were particularly robust, growing 79 per cent to Dh427 million. Last year’s net profit gains were also helped by the handover of infrastructure as part of a transaction with the Abu Dhabi government announced last year.
Full-year revenues weighed in with Dh5.38 billion. The company had recommended a cash dividend of 7 fils a share, 17 per cent higher than in 2012. Also, recurring revenue grew 27 per cent to Dh1.83 billion, largely due to the combination of Aldar and Sorouh investment properties on merger.
“We have moved quickly to build a platform for sustainable growth having completed our merger integration earlier than planned,” said Abu Bakr Seddiq Al Khoori, chairman. “We have strengthened our financial position, enhanced our capital structure and made progress balancing our business between development and recurring revenues.
“We are working on new development projects from our extensive land bank that will lead us into a new phase of profit growth that will drive shareholder value.”
Aldar has plenty of that. “With the clearance that confirms full freehold status for property bought from Aldar definitely makes it attractive from an investor perspective,” said Robin Teh, country manager – UAE at Chesterton International.
Away from residential, Aldar has scale building up in the retail space… literally. The Yas Mall opening date was recently confirmed for November. The hospitality side too is helping with revenues. “Revenues from the hospitality portfolio, which includes seven hotels on Yas Island and now the Tilal Liwa Hotel in the Western region of the emirate, increased 21 per cent to Dh504 million,” said a statement issued by the developer. Full-year occupancy was up to 77 per cent last year against 2012’s 65 per cent.
Regarding the merger with Sorouh, the statement said: “Following completion of the merger, the two businesses are now fully integrated. Systems and processes are now aligned and all re-branding activity has been completed. The company is well on track to exceed its per annum synergy estimate of Dh90-110 million”.
While it opens up new income streams, gains have been sighted on its costs. A further Dh2.25 billion of debt was paid on receiving Dh3.5 billion as contractual payments from Abu Dhabi since the end of 2013.
Also, “Aldar has been focused on reducing the cost of borrowing, extending its maturity profile and lowering its leverage levels post the completion of the merger with Sorouh,” the statement said. “During the fourth quarter, Aldar raised $750 million via a five-year Sukuk. The transaction was priced very competitively at a fixed profit rate of 4.348 per cent and proceeds were used to repay debt and extend the company’s debt maturity profile.”
As of end December, total assets were Dh43.7 billion and gearing (net debt to equity) at 58 per cent and a considerable improvement on the 144 per cent from a year earlier. It had Dh8.3 billion of cash and available liquidity at the end of 2013.
“There is an undercurrent of investor interest attached to opportunities in Abu Dhabi; it’s mostly bulk investor driven at the moment but could soon start to pull in individual buyers as well with more completed properties coming through,” said Niraj Masand, partner at Banke M.E.