Sorouh Half year results 2011

Abu Dhabi, 28 July 2011: Sorouh Real Estate PJSC (“the Company” or “Sorouh”), the Abu Dhabi-based real estate developer (ADX: SOROUH), today announced its half year results for the period ended 30 June 2011.

• Strong revenue performance (169% up on H1 2010) leading to a very profitable first half
• Profit up 33% to AED 202 m in the first half
• AED1 billion of revenues recognised from Sun and Sky towers handover
• AED 782m of cash collected during the first half
• 448 units handed over in Sun and Sky towers and the Abu Dhabi Aviation residential complex
• 109,000 sq ft in new residential and commercial sales and leasing contracts signed

Results highlights

Revenues for the half year 2011 were AED 1.67bn (H1 2010: AED 621m). Net profit for the half year 2011 was AED 202 m (H1 2010: AED 152m) derived principally from the ongoing handover of units in Sun and Sky Towers, revenues for UAE national housing projects, rental income from Sorouh’s property investment portfolio and revenues from subsidiaries. Earnings per share for the period were 7 fils per share (H1 2010: 6 fils per share).

Revenues for the second quarter 2011 were AED 1.22bn (Q2 2010: AED 190m). Net profit for the second quarter 2011 was AED 125 m (Q2 2010: AED 20m).

The Company maintains a strong balance sheet with net assets as at the end of the first half 2011 of AED 6.4bn (FY 2010: AED 6.2bn).

The Company has low gearing, maintains AED 1.3bn (FY 2010: AED 1.3bn) of cash on its balance sheet and has AED 500m of undrawn committed bank lines available. Total bank borrowings are AED 2.2bn, representing a debt-to-equity ratio of 34 per cent. 

Operational Review

Shams Abu Dhabi

• The commercial handover in Sky Tower began at the end of Q1 2011 and 113 units have been handed over by half year end (76 per cent of sold commercial units)

• Handover of residential units started at the beginning of May 2011. Over 275 units have been handed over by half year end – (28 per cent of total residential units sold), with 87 families in Sky Tower and 62 families in Sun Tower having moved into their new homes.

• Sales and leasing of unsold inventory is progressing well with a number of new sales and leases executed during the first half. Forty-one leases were signed during the period with an annualised lease value of AED 9.3m. Of these, 34 were residential units and 7 were commercial units. This included a 10-year lease agreement signed with the Austrian Embassy. Meanwhile, there were eight sale transactions for a total of AED 59.1m, six of which were commercial units and two were residential penthouses.

• Towards the end of the first half, Sorouh launched Abu Dhabi’s first “Rent to Own” offer. The offer enables tenants of Sun Tower to have the right to own their apartment after three years of renting and convert 90 per cent of the rent paid into equity. This initiative is receiving a significant amount of interest, resulting in over 22 per cent of the stock on offer in Sun Tower being taken up by tenants.

• Sorouh has completed the infrastructure on Shams Abu Dhabi, allowing 10 other sub-developers to make progress with their own projects. The Sun and Sky Towers are the first mixed-use development to be completed on Shams Abu Dhabi.

• The Gate Towers, the three towers that form part of Shams Gate, are advancing rapidly. At present, structural work is being carried out on the last two levels which will then house the penthouse structure. The construction of the smaller fourth tower, the Arc, has topped out at level 23.

Saraya

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

alrayyana  

• Construction of the 33 buildings is progressing well with buildings already topped out, 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, alrayyana will be a significant recurring income contributor to Sorouh.

Sorouh’s Tower at Danet Abu Dhabi

• The development has now been completed, and only awaits the provision of permanent power supply by the master developer.

• Sorouh’s Tower will also be another significant source of recurring income for Sorouh.

alghadeer

• The development is progressing well, with infrastructure development in an advanced stage.  Good progress has been made on the alghadeer 33/11kV substation.

• The construction of the residential buildings is moving at a fast pace and within the various phases, construction has reached the second floor and roof slab levels. The development is on track for completion at the end of 2012.

Master-planned communities for Emirati families

• Continuous progress is being made on both phases of the Watani residential development, with a scheduled completion date for phase 2 by Q4 2012.

• Infrastructure work is progressing on the Al Ain Ghuraibah, Shamal Al Shuaibah and Al Sila’a Al Gharbia national housing projects, which are targeted for completion by Q3 2012.

Other

• Tilal Liwa, the hotel located in the Western Region, has been profitable and cash flow positive for the second quarter with an average occupancy of 75 per cent for the first half of the year.

Abubaker Seddiq Al Khouri, Managing Director, Sorouh, commented:

“We are pleased to report a very strong performance for the first half of the year. The significant increase in our revenues and profitability has been driven principally by the handover of Sun and Sky Towers, the first completed development on Al Reem Island.  The handover is very much on track and has already generated over AED 1bn of revenues during the first half. Nearly 150 families have now moved into Sun and Sky towers, which are now starting to feel like a real community. We have also seen encouraging sales and leasing demand for the two towers, spurred on by our innovative rent-to-own offer, the first of its kind in Abu Dhabi.

“The strong delivery programme and improving quality of earnings ensures we have a robust business model. We have continued to strengthen and diversify our income streams by growing the recurring income portfolio and increasing the work we do with the government on national housing projects.  Looking ahead to the remainder of the year, we expect to see further progress in the profitability of the business. Longer-term, the Abu Dhabi investment case remains compelling and we are very proud to be a trusted government partner, playing an important role in Abu Dhabi’s 2030 vision.”