Aldar’s delivery programme will continue into the second half of the year with a focus on delivery and handover of the remaining units and land plots at Al Raha Beach.
The Company ended the period with a strong cash and liquidity position. At the end of the period, cash balances were Dhs2,459.6m and Dhs3.2bn of available liquidity from the credit facility with National Bank of Abu Dhabi, providing the Company with ample working capital and liquidity to deliver on its business plan.
Aldar’s ongoing programme of debt reduction continued during the quarter with repayments totalling Dhs4.3bn, including the early retirement of Dhs1.9bn term loan. This brings total borrowings down to Dhs14,358m (December 2011 Dhs18,295m) at the end of the period.
Aldar benefits from highly predictable and stable ongoing cash flows with Dhs12bn cash still to be received from the three main asset sale agreements signed with the Government of Abu Dhabi between 2009 and 2011. The Government asset sale agreements also provide a source of stable earnings, including Dhs3.6bn of revenue still to be recognised relating to serviced land sales at Al Raha Beach. These contracted sales provide the foundation for Aldar’s strong ongoing revenue and cash flow visibility over the coming quarters.
Q2 2012 Operational Update:
- Development Projects
Development revenues for the quarter were Dhs4.2bn, up from Dhs400m in Q2 2011 based on strong deliveries of units.
During the second quarter, Aldar handed over 1,058 residential units to customers at Al Raha Beach, including the Government of Abu Dhabi. A further 680 units have been sold and await completion and hand over. Aldar’s remaining inventory for sale consists of 391 units principally at Al Raha Beach and Reem Island.
Al Bateen Park is on-schedule and is 97% pre-sold. The development at Al Ward, the precinct of Al Raha Gardens is now fully pre-sold. Both are scheduled for delivery in Q4 2012.
Retail and commercial
At Yas Mall, Aldar’s 233,000 sqm flagship retail development on Yas Island, considerable progress has been made on construction with the installation of underground utilities in progress and the ground level floor slabs underway. The project remains on schedule for delivery in Q4 2013 and pre-leasing is at 60%.
The Village Retail development for the residents of Al Falah is on schedule for completion in Q4 2012 and joins other community retail facilities owned by Aldar, such as Gardens Plaza in Al Raha Gardens and the Al Raha Beach amenities.
The leasing programme on the newly delivered Al Noor building at Al Raha Beach is well under way.
Land and infrastructure
Infrastructure works, including canal excavations, roads and interchange works at Al Raha Beach are nearing completion on schedule and expected to be completed over the next 12 months.
Development projects managed on behalf of third parties generated project management fees of Dhs46m in the second quarter. These include revenues relating to a number of substantial and prestigious developments including the National Housing development at Al Falah, Cleveland Clinic, Yas Waterworld, World Trade Center Abu Dhabi and the Masdar Institute of Science and Technology.
- Investment Properties and operating businesses
Recurring revenues from investment properties and operating businesses, increased 12% to Dhs338.6m in the second quarter (Q2 2011 Dhs302.6m). Aldar’s commercial office portfolio is substantially let and further growth is expected from retail and community retail projects including Ace Hardware on Yas Island, the community retail facilities at Al Raha Beach and Motorworld showrooms. In addition to its for-sale inventory, Aldar has allocated 378 residential units at Al Raha Beach to form a new leasing portfolio during Q2. Of these, 191 are leased, including 155 units to Aldar Academies.
The majority of Aldar’s 174,000 sqm of high-quality commercial offices is fully let and occupied on a long-term basis by Government-entities and commercial tenants. 60% of the HQ building is now leased or under heads of terms and there is a robust pipeline of tenant enquiries.
We are delighted to announce the addition of 118 used car showrooms at Motorworld and an ACE Hardware to our retail portfolio during the quarter, both of which will add to our recurring revenue base.
The community retail portfolio at Al Raha Beach is 53% leased. This joins Gardens Plaza at Al Raha Gardens, which opened in 2011 and is fully let and operational.
As part of its strategy to enhance and optimise recurring revenues from its residential portfolio, Aldar allocated 378 units at Al Raha Beach to form a new leasing portfolio during Q2, which complements Aldar’s sales and rent-to-own residential offers. We were also pleased to announce 155 units leased to Aldar Academies under this programme.
Aldar’s hotel portfolio performed well during Q2 despite a competitive market. Average occupancy for the quarter was 58% compared to 59% for the same period in 2011 (H1 2012 62% v H1 2011 61%) against a soft market. We look forward to continued growth as the addition of Yas Waterworld and Yas Mall will drive increased footfall to Yas Island and occupancy levels at our hotels.
There was strong performance by Aldar Academies during the quarter reflecting the increase in enrolment from the three new schools that opened in September 2011. Revenues were Dhs66.4m during the first half of the year, up from Dhs49.8m in the same period last year.
In the operative villages portfolio, the 5,000-bed Al Ain operative village has now opened and leases were signed during Q2 with a number of corporate tenants.
Merger with Sorouh Real Estate PJSC:
During the first quarter of 2012, Aldar Properties PJSC and Sorouh Real Estate PJSC announced that the companies would be exploring the merits of a potential merger. On 10 June 2012, the two companies announced that a steering committee including representatives from Aldar and Sorouh had been formed to evaluate a potential merger. The companies also announced that the due diligence process was underway to assess in detail the implications for all stakeholders and that this process would take a number of months. The due diligence process is well under way and a further update will be made as and when appropriate.
Ali Eid Almheiri, Chairman of Aldar Properties, commented, “Aldar’s results clearly demonstrate its strong financial position. Impressive quarterly performance has been driven by the delivery of a substantial volume of units to our customers including the Government of Abu Dhabi. During the second half of the year Aldar will continue to deliver strong revenues and predictable cash flows. This stability enables us to focus on our long-term strategy- to remain Abu Dhabi’s pre-eminent developer. We have a strong pipeline of development projects to deliver over the second half of the year and into 2013 and we look forward to contributing profitably to Abu Dhabi’s future real estate pipeline.”
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