Sorouh Real Estate PJSC reports Q3 profits

ABU DHABI: Abu Dhabi-based real estate developer (ADX: SOROUH) Sorouh Real Estate PJSC (“the Company” or “Sorouh”) today reported a 54.5% rise in its third-quarter net profit and said no decision has been taken so far about its proposed merger with rival Aldar Properties.

Sorouh had net consolidated profit of AED129.2 million, up from AED83.6 million in the prior-year period, it said in press release on its third quarter results for the period ended 30 September 2012.

Sorouh continued its strong performance in Q3. As its net profit was up 55 % year-on-year, reflecting continued strengthening of sustainable recurring income streams from Sorouh s National Housing projects, investment portfolio and the release of contingencies and provisions.

Revenues from National Housing projects increased significantly quarter on quarter to AED607m from AED68m in 2011, a nine fold increase.

A further 10 units at Sun and Sky (including 4 commercial units) and 2 villas at Golf Gardens were handed over, resulting in AED94m of revenues.

The leasing portfolio generated AED51m of revenue, 19% up on last year. Sun and Sky is now at 95% occupancy, and Al Murjan at 90%. Interest continues for bulk leases from corporate clients, and we are confident of reaching our goal of half a billion Dirhams of recurring revenues by the end of 2014.

Other income increased mainly through the release of AED40m of contingency provisions for Sun and Sky, which are no longer required now that the towers are complete and have been operational for over 12 months.

Our financial position is robust, with cash collections of approximately AED1.6bn up until the end of the third quarter, AED774m of cash on the balance sheet and low gearing of 38%.

Sorouh’s net asset value per share is AED2.51 (Q3 2011: AED2.43).

Managing Director of Sorouh , commented: “Profit growth has continued during this quarter driven primarily by our by National Housing developments. The quality of the business’s overall earnings continues to mature as we build more sustainable revenues and a stronger investment portfolio.

“During the next quarter, we expect to make further progress on National Housing developments and move closer to the completion of the Gate Towers, which we will begin to handover early in 2013.

Sorouh has a strong balance sheet and remains well positioned to deliver its development portfolio in the coming years.” Sorouh confirmed that discussions regarding the possible merger with Abu Dhabi’s Aldar Properties 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.” — Sorouh’s Q3 2012 Development Portfolio Update Shams Abu Dhabi Sun ‘&’ Sky Towers are now an established community with over 1,000 families living at the development along with key commercial tenants.

BOUTIK Sun ‘&’ Sky is generating solid footfall driven by Abu Dhabi’s first Waitrose supermarket, together with numerous other retail operators, including Italianissimo, La Brioche, Yogen Fruz and Cafe Macondo, among others.

Commercial tenants at Sun ‘&’ Sky Towers include the Austrian Embassy, Agthia Group, Al Ramz Financial Services, Advanced Integrated Systems and Arabian Construction Company.

The Gate Towers are over 91% complete and advancing rapidly. At present, all sections of the penthouse bridge structure have been raised and locked in place.

Sorouh has completed the infrastructure on Shams Abu Dhabi and continues its de-risking programme by handing over key utilities to the relevant authorities. Discussions for reimbursement of infrastructure continue with the local authorities. As at Q3 2012, 12 sub-developer plots were under construction, one sub-developer property has obtained its Building Completion Certificate and commenced handover to end users. Two more sub-developer properties are expected to be completed in 2012.

Alghadeer The development is almost 85% complete and progressing well, with infrastructure development and the construction of the residential buildings moving at a rapid pace. The development is on track for phased completion and delivery between the end of 2012 and 1Q 2013.

Saraya All infrastructure works at the Saraya master-planned development, near the Abu Dhabi Corniche, are complete and five plots are currently under construction by sub-developers. This is a positive development for the location and is a catalyst for other sub-developers. It has also created an interest in the secondary market for the sale of land plots.

National Housing: Construction at the Watani development is progressing well, and Building Completion Certificates for phases one and two have been applied for. Both phases are on track for completion in 2012.

Construction work continues on Sorouh’s two other National Housing projects, at Ghuraibah in Al Ain and Al Sila’a in the Western Region.

Investment Properties – Residential: Al rayyana Following an incident with one of the courtyards at al rayyana, further leasing activity has been deferred pending completion of remediation works at the development. All existing tenants have been relocated and are expected to be able to move back into the development in the summer of 2013.

Al Murjan 90% of units have been leased as at end of Q3 2012. Almost half of the retail space has now been leased out to Spinneys, the high-end supermarket chain.

Investment Properties – Hospitality and Retail: BOUTIK Al Ain The development is complete and due to open in Q1 2013. Attractions include a cinema and children’s entertainment area. Carrefour is on schedule to complete its fit out and be operational as the anchor tenant as soon as the mall opens.

Tilal Liwa Tilal Liwa, the hotel located in the Western Region, remains profitable and cash-flow positive with occupancy at around 70% for the first half of 2012.

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