Revenues were driven mainly by the delivery and handover of 132 residential units, and 25 land plots at Al Raha Beach.
The Company continues to have strong on-going revenue and cash flow visibility with Dhs12.0bn cash still to be received, and Dhs2.6bn of revenue still to be recognised from land sales at Al Raha Beach, following the three main asset sale agreements signed with the Government of Abu Dhabi between 2009 and 2011.
Recurring revenues from investment properties and operating businesses were up 8% to Dhs306.0m in the third quarter (Q3 2011: Dhs282.9m) and broke through the Dhs1.0bn mark over the first nine months of the year. These were driven by increased occupancy year-on-year from the office portfolio, notably HQ, and maturing retail operations, in particular Gardens Plaza and IKEA. We are delighted to announce that outline heads of terms have been agreed through a joint venture with Etihad Airways to purchase the 17,700sqm Al Noor building at Al Raha Beach, which is to be leased on a long-term basis to Etihad Airways.
Aldar has ample working capital and liquidity to deliver on its business plan. At the end of the period, free cash balances were Dhs888.2m, in addition to available and undrawn liquidity of Dhs3.2bn through revolving credit facility agreed earlier in the year.
The Company’s on-going programme of debt reduction followed a normal schedule of repayments during the quarter with Dhs63.4m repaid. A further Dhs309.4m will be retired on schedule in Q4. Aldar’s total borrowings stood at Dhs14,429.3m compared to Dhs18,295.5m as of 31 December 2011.
As a result of the recent detailed valuation exercise relating to the potential merger with Sorouh Real Estate PJSC, the Company has updated the valuation of certain of its assets to reflect current conditions. The Company has therefore elected to write down the value of its assets by a net amount of Dhs737.1m reflecting principally impairments to its hotel assets that are partially offset by fair value gains on Yas Mall. As a further result of the valuation exercise, the Company has written back Dhs431.5m of excess accruals and recoverable costs, which had been written off in previous periods.
Ali Eid Almheiri, Chairman of Aldar Properties commented: “We are pleased to see that Aldar’s communities are starting to thrive as more customers occupy our developments. We are proud of our contribution to Abu Dhabi’s ongoing growth and that our established delivery record continues to produce stable cashflows and profits for our shareholders. We have moved from strength to strength – both financially and operationally – and remain well positioned to execute our business plan and confirm our position as Abu Dhabi’s premier developer.”
Development revenues for the quarter were Dhs1,249.9m (Q3 2011: Dhs2,792.3m) based on the on-going delivery of land plots and units at Al Raha Beach to our customers including the Government of Abu Dhabi.
Aldar handed over 132 residential units to customers in the quarter, predominantly at Al Raha Beach. Additionally, 25 new units were sold at developments including Al Zeina, Al Muneera and Al Bateen Park. Remaining inventory available for sale consists of 372 units.
The 359-unit Al Bateen Park development in the centre of Abu Dhabi, which is on track to be completed and handed over to owners in the final quarter of the year, is 97% pre-sold.
Construction at Yas Mall, the 233,000 sqm flagship retail development on Yas Island, proceeds on programme. Authority inspections have been conducted and approvals have been received for Yas Mall’s power substations. The leasing programme continues steadily with 60% pre-let and we remain focused on an optimal tenant mix at this stage of the programme 15 months prior to completion.
The Village Retail development for the residents of Al Falah is on schedule for delivery in Q4 2012. The development comprises 116 retail units, of which 86 units are pre-leased. Tenant fit-out will begin in the beginning of 2013.
Development projects managed on behalf of third parties generated project management fees of Dhs48.5m in the third quarter (Q3 2011: Dhs57.8m). Development management is a significant element of Aldar’s operations and underscores the Company’s preferred developer status with the Government.
We were pleased to handover the second phase of 1,083 units at Al Falah Community, Abu Dhabi’s largest and most prestigious development of housing for UAE Nationals. More phased handovers will occur in the final quarter of 2012 at the prestigious 4,857-unit National Housing development.
We are now within sight of handover at Yas Waterworld Abu Dhabi, which has moved into finishing and testing phase ahead of opening at the end of the year. The latest leisure attraction on Yas Island, Yas Waterworld Abu Dhabi will feature a number of unique rides, including four one-of-a-kind rides that have never been seen in any other water park in the world and will help draw footfall to the island.
Investment Properties and operating businesses
Recurring revenues from investment properties and operating businesses were up 8% to Dhs306.0m in the third quarter (Q3 2011: Dhs282.9m) driven by increase occupancy in office portfolio, in particular HQ, and by expanding retail portfolio with opening of new community retails at Raha Gardens, Bandar and IKEA on Yas Island.
We are delighted to announce that outline heads of terms with Etihad Airways have been agreed through a joint venture to purchase the 17,700 sqm Al Noor building at Al Raha Beach, which was completed earlier this year. It is proposed that the building will be leased on a long-term basis to Etihad Airways and definitive agreements to be signed in Q4.
Earlier in 2012, ACE Hardware was delivered ahead of schedule to its operator Al Futtaim during the second quarter, opened for business in August. The opening of the 5,500 sqm superstore on Yas Island heralds yet another milestone in this unique retail destination. ACE Hardware joins IKEA in offering a value-added retail concept to the forthcoming Yas Mall, which will offer Abu Dhabi a unique retail destination.
Average occupancy for the hotel portfolio was 56% for the quarter vs. 54% for the same period in 2011, as the Abu Dhabi market remains soft against a backdrop of new supply, particularly in the five-star segment.
The new school year resulted in the enrolment of 546 more students – to 3,541 – at the six Aldar Academies schools in Abu Dhabi and Al Ain than in the same period last year. This is the second year of operation for three of the schools. With capacity of over 5,000 students, Aldar Academies’ growth continues in line with our expectations.
Further to previous announcements, the Company also confirms that discussions regarding the possible merger with Sorouh Real Estate PJSC continue to progress and are at an advanced stage. A decision will be taken by the Company’s board of directors as to whether or not to recommend the merger to the Company’s shareholders in due course. The Company will, in accordance with applicable disclosure requirements, provide the market with a further update in relation to the merger as and when appropriate.
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