SorouhThird quarter results 2011
Sorouh Real Estate PJSC (“the Company” or “Sorouh”), the Abu Dhabi-based real estate developer (ADX: SOROUH), today announced its third quarter results for the period ended 30 September 2011.
- Consolidated net profit of AED83.6m up 33% on Q3 2010
- 19% margin on Sun and Sky unit handovers for the quarter
- AED600m of cash collected during the quarter
- Over 100 units leased and sold in first 9 months of 2011
- Al Murjan at Danet Abu Dhabi commenced the handover of 252 residential units and 3,000 sq m of retail/office space. 40% already leased.
Revenue for the third quarter 2011 was AED890m (Q3 2010: AED388m), principally driven by the continued handover of Sun and Sky Towers, construction revenue from the Watani project and rental income from Sorouh’s property investment portfolio. The rental portfolio continues to be a meaningful contributor to revenues and provides cover for the Company’s corporate expenses. Revenue for the first nine months was AED2,561m (9M 2010: AED1,008m).
Net profit for the third quarter 2011 was AED83.6m (Q3 2010: AED62.9m) after provisions of AED50.7m. These provisions were prudently charged primarily against investment property valuations despite relative firmness of our rent rolls versus the market average.
Net profit for the nine month period was AED285m (9M 2010: AED215m).
Earnings per share (EPS) for the three month period were 3 fils (3M Q3 2010: 2 fils). EPS for the nine months were 9 fils (9M 2010: 8 fils).
The Company maintains a strong balance sheet with net assets as at the end of the third quarter 2011 of AED6.5bn (FY 2010: AED6.2bn).
The Company has low gearing, maintains AED1.2bn of cash on its balance sheet and has AED500m of undrawn committed bank lines available. Total bank borrowings are AED2.1bn, representing a debt-to-equity ratio of 34%.
Shams Abu Dhabi
- The commercial handover in Sky Tower began in early March 2011 and approximately 80% of sold commercial units have been handed over.
- Handover of residential units at Sun & Sky Towers started at the beginning of May 2011 and around 65% of those sold have been handed over by period end. There is a growing community now forming with over 550 families living in Sun and Sky Towers.
- Sales and leasing of unsold residential and commercial inventory is progressing well with over one hundred new leases and sales being executed year-to-date.
- In June, 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% of the rent paid into equity. This initiative is receiving a significant amount of interest, resulting in almost 40% of leased units being taken up by Rent-to-Own 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.
- All infrastructure works at the Saraya master-planned development near the Abu Dhabi Corniche are complete and four plots are currently under construction by sub-developers. This is a positive development for the location and is a catalyst for other sub-developers to follow suit. It has also created an interest in the secondary market for the sale of land plots.
- 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.
- Last week, Sorouh signed a 30-year corporate lease for roughly 20% of the units with DCI, a French government-related company. Once delivered in 2012, al rayyana will be a significant recurring income contributor for the Company.
Al Murjan, (formerly known as Sorouh’s Tower at Danet Abu Dhabi)
- Al Murjan has now been completed and handed over. The 252 units residential tower is now being leased and a corporate lease for 20% of the units has been secured. 40% of the tower has already been leased.
- Al Murjan will also be another significant source of recurring income for Sorouh.
- 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
- Continued progress has been made at Watani with phases one and two of the project progressing on track for delivery in 2012.
- Construction work has also commenced on the Ghuraibah Shamal Al Shaeibah, Al Ain and Al Sila’a Al Gharbia, Western Region National Housing developments.
- Tilal Liwa, the hotel located in the Western Region, has been profitable and cash flow positive for the third quarter with an average occupancy of 68% for the month of September 2011 and 72% year to date.
Abubaker Seddiq Al Khouri, Managing Director, Sorouh, commented:
“It has been another period of solid performance despite the challenging market backdrop. The highlight has been the continued and successful handover of another 340 or so units to customers during the period. Sun and Sky Towers, the first new and thriving community on Al Reem Island, is really taking shape.
“We continue to see pick-up in sales and leasing demand during the period, partly driven by our innovative lease to own and rent to own products. We have continued to deliver quality product into the market this quarter by handing over the latest addition to our investment property portfolio, Al Murjan. Al Murjan is already starting to see strong demand with 40% of the building already leased out. Last week, we were very pleased to announce a large long-term leasing deal with DCI, a French government-related company, for al rayyana. Both Al Murjan and al rayyana will significantly strengthen our growing recurring income portfolio.
“We continue to play a significant role in the development of national housing projects and it is pleasing to see good progress being made across these developments. The award of these contracts give us considerable pride, especially in this special anniversary year of the nation, as we continue to support Abu Dhabi’s vision for the future.”