First Quarter Results 2011
Abu Dhabi, 28 April 2011: Sorouh Real Estate PJSC (“the Company” or “Sorouh”), the Abu Dhabi-based real estate developer (ADX: SOROUH), today announced its first quarter results for the period ended 31 March 2011.
- Revenues up 5% quarter on quarter
- Handover of Sun and Sky commenced on 1st March – circa 25% of commercial units handed over
- Handover of residential units in Sun and Sky to commence 3rd May
- Pick up in sales and leasing interest in Sun and Sky Towers
- Increase in the proportion of recurring income through long-term leasing deals
Revenues for the first quarter 2011 were AED 452m (Q1 2010: AED 430.7m). Net profit for the first quarter 2011 was AED 76.3m (Q1 2010 AED 131.6m).
In March, the company commenced the phased handover of Sun and Sky towers. The towers are the first Grade A buildings to be delivered in Abu Dhabi’s new investment zone on Shams Abu Dhabi, Al Reem Island. Since handover commenced on 1st March, circa 25% of commercial units have been handed over resulting in AED 100m of cash collection, AED 226m of revenue recognition and AED 40m of profits this quarter. The handover of residential units will commence on 3rd May 2011. Other profit made during the quarter derived mainly from leasing income from Sorouh’s growing investment portfolio, continued construction progress on Watani, a government housing project and profits from subsidiaries.
Earnings per share for the period were 2 fils per share (Q1 2011: 5 fils per share).
The Company maintains a strong balance sheet with net assets as at the end of the first quarter 2011 of AED 6.3bn (FY 2010: AED 6.2bn).
The Company has low gearing, maintains AED 965m (FY 2010: AED 1.3bn) of cash on its balance sheet and has AED 1bn of undrawn committed bank lines available. Total bank borrowings are AED 1.7bn, representing a debt-to-equity ratio of 27%.
All of Sorouh’s Abu Dhabi developments remain on track with the focus being on maintaining delivery schedules:
Shams Abu Dhabi
- Sorouh has invested AED 1.7bn in the infrastructure of Shams Abu Dhabi over the last three years and the infrastructure works are now substantially complete. This investment has enabled sub-developers to move ahead with their developments, with 10 plots now under construction, three developers are expected to complete by the beginning of 2012.
- At the beginning of March, Sorouh began the phased handover of units to owners in Sun and Sky Towers, on Sorouh’s Shams Abu Dhabi. These were the first Grade A buildings to be delivered in Abu Dhabi’s new investment zone on Al Reem Island.
- Since handover commenced, circa 25% of commercial units have been handed over. Handover of the residential units will start on the 3rd May.
- Sales and leasing of unsold inventory is progressing well with a number of new sales and leases being executed. During the period, 22 leases were signed (worth AED 28m), of which 18 were residential units and four were commercial units. This included a 10-year lease agreement signed with the Austrian Embassy. Meanwhile, there were four sales transactions (worth AED 20m), two of which were commercial units and two were sales of residential penthouses.
- Over 70% of the retail space at BOUTIK has been leased. The tenant mix will provide a supermarket, F&B and the right mix of retail amenities and convenience stores to suit people’s everyday needs. The mall is scheduled to open during the second half of the year.
- Sorouh recently signed a deal for BOUTIK to house Abu Dhabi’s first Waitrose. Fit-out by this anchor tenant has already begun and the store is expected to open in the second half of the year.
- The Gate Towers are advancing rapidly, and the core walls have reached between 62 and 64 storeys high and are due to top out in the second half of 2011.
- Infrastructure works at the Saraya master-planned development near the Abu Dhabi Corniche is complete and four sub-developer plots are currently under construction.
Sorouh’s compound for the Abu Dhabi Aviation Company
- A thirty year lease has been signed with Abu Dhabi Aviation Company for the provision of staff accommodation. The compound was handed over in February, and the first annual lease payment has been received.
- Construction of the 33 buildings is progressing well and several buildings have already topped out, with civil works now complete, and block work and finishes making good progress. The district cooling plant has been procured and assembly is moving in tandem with the construction works. Once complete, al rayyana will be a significant recurring income contributor to Sorouh.
Sorouh’s Tower at Danet Abu Dhabi
- The project is now in its final stages, and only awaits the provision of power supply and chilled water by the master developer.
- Sorouh is working with the authorities to finalise all requirements and will shortly proceed to apply for approvals.
- Sorouh’s Tower will also be another significant source of recurring income for Sorouh.
- The development is progressing well, with 90% of the deep infrastructure now complete. Construction on 10kms of roads, 13kms of storm water gravity drainage, 16kms of potable water networks and 18kms of gravity sewers will bring the overall infrastructure to completion. Good progress has been made on the alghadeer 33/11kV substation.
- The construction tender for alghadeer’s homes has been awarded and building has started, on track for completion in 2012.
Master-planned communities for Emirati families
- Substantial progress has been made at Watani with phases one and two of the project progressing on track for delivery.
- During Cityscape in April, Sorouh announced that it had been awarded two new contracts by the Urban Planning Council to build high quality residential units for UAE nationals. These two contracts together comprise a total of 1,470 quality villas to be delivered over the next two years, with combined total project values of AED 2.89 bn.
- Tilal Liwa, the hotel located in the Western Region, has been profitable and cash flow positive for the first quarter with an average occupancy of 74%.
Abubaker Seddiq Al Khouri, Managing Director, Sorouh, commented:
“We are pleased to report another solid result for our shareholders. The delivery of our landmark buildings, the Sun and Sky Towers, is generating cash, revenues and profits for the business, as well as revealing the true demand in the market. In recent weeks, there have been some positive early indicators in the property market as a number of unit sale and leasing transactions have started to come through.
“I believe that the fundamentals of the UAE, in particular Abu Dhabi, continue to go from strength to strength as companies look to the country for personal and business security as well as advanced infrastructure.
“The business is in strong financial health and is well funded to continue to deliver an exciting project pipeline into the market to meet the growing demand for quality units.”