Aldar achieved a 7% year-on-year increase in sales of development projects to reach AED 1.2 billion during the third quarter. This resulted in total sales of 2.0 billion dirhams from the beginning of the year to date, as investors and end-users continued to buy real estate in prime locations within Saadiyat and Yas islands.
The Aldar portfolio showed a high level of stability despite the challenging business environment imposed by the “Covid-19” pandemic, and the occupancy rate across its diversified portfolio of assets, residential, commercial and retail was stable at 87%. The company also continued to record steady income from the business of managing development projects for external parties, which is expected to expand further after the company concluded in late October (after the end of the third quarter period) a memorandum of understanding with the Abu Dhabi government to develop and manage major projects exceeding 30 billion dirhams.
Talal Al Dhiyabi, CEO of Aldar Properties, said: “Aldar continued to record strong performance during this difficult year, and we were able to achieve lucrative profits thanks to the great diversity in our business model. The company relies on two major business sectors, which include a large and diversified portfolio of revenue generating investments as well as development work for major locations in Abu Dhabi. This provides the company with strong cash flow and revenue projection, in addition to achieving significant revenue and profit growth. ”
He added: “In light of its balance sheet and strong cash flow, Aldar continues to invest in the development projects under implementation and expand its investment portfolio as well. The strong sales in our major projects reflect investor confidence in the real estate pillars of the Emirate of Abu Dhabi, supported by the government’s commitment to achieving its strategy for economic growth and diversification. Aldar is proud of its cooperation with the Abu Dhabi government in developing more major strategic projects.
Financial and operational developments
The Development Projects Department at Aldar recorded revenues of 1.29 billion dirhams during the third quarter of 2020, more than double the value recorded for the same period last year. This exceptional growth is attributed to the strong sales of completed residential units, and the income generated by the continued handover of projects under construction and project management for the benefit of the Abu Dhabi government.
The house also met with wide demand for its high-quality residential units in the projects of “Water’s Edge”, Saadiyat Walkway, and “Narel” Island. With the launch of digital solutions and virtual tours, the company was able to continue its sales during the year 2020 despite the temporary closure the country witnessed due to the “Covid-19” pandemic at the beginning of the year.
The net operating income of the Asset Management Unit reached AED 383 million, ie a decrease of no more than 3.5% year-on-year, which highlights the importance of the wide diversification of the portfolio during these exceptional circumstances.
The losses in hospitality and retail assets as a result of the preventive measures taken to confront “Covid-19” were compensated for the stable performance of the commercial and residential real estate portfolio, in addition to an increase of 5% on an annual basis in the total profits from secondary businesses, including Aldar Education and the real estate management company “Provis”. , And the facility management company «Service».
Aldar maintained a strong balance sheet with a free cash flow of 2.5 billion dirhams, undrawn credit facilities worth 4.0 billion dirhams as of September 30, 2020, in addition to 3.1 billion dirhams worth of receipts from development projects throughout the year to date.
Updates of support programs
In March 2020, the house launched several programs to support tenants, home buyers, and society in general in facing the repercussions of the Covid-19 pandemic. Since the launch of these programs, the House has reduced school fees by 20% for nearly 7,500 students in the schools affiliated with the House of Education, and has invested about 10 million dirhams in the field of technology, including providing laptops to students and developing a distance education platform; Aldar Academies has also set up a aid fund worth 6 million dirhams to support parents during these difficult times.
Aldar has allocated 60 million dirhams to support residential unit buyers and tenants by providing competitive financing products in the market, lease-to-own offers, monthly rental payment plans, and convenient rental payment options. The number of residential real estate buyers who benefited from the subsidized mortgage offer reached more than 330 buyers, which resulted in the sale of housing units valued at over one billion dirhams.
The company also launched a series of initiatives to support retail partners whose value exceeded 90 million dirhams, which helped companies continue operating in these unprecedented circumstances.
Financial results for the third quarter
- Aldar achieved substantial growth in third quarter 2020 revenue by 30% to reach AED 2.1 billion compared to AED 1.6 billion in the previous year, mainly due to strong sales of residential inventory and increased income from third-party development projects management business.
- Gross profit increased by 5% to reach AED 696 million in the third quarter of 2020 compared to AED 662 million in the previous year; Net profit increased by 8% to reach 416 million dirhams in the third quarter of 2020, compared to 387 million dirhams in the previous year.
Management of development projects
- The Development Projects Department recorded a growth of 101% year-on-year in revenues for the third quarter of 2020 to reach 1.29 billion dirhams, compared to 642 million dirhams in the third quarter of 2019.
- Development projects management gross profit increased 23% year-over-year in Q3 2020.
- A record increase in quarterly sales of development projects management by AED 1.2 billion due to strong demand for its high-quality projects across prime locations including Water’s Edge, Saadiyat Walk and Nareel Island.
- Year to date, year-to-date cash collections for units delivered and projects under development amounted to 3.1 billion dirhams.
- The third-party development project management business will expand significantly following the Memorandum of Understanding that the company signed with the Abu Dhabi government in late October (following the end of the third quarter period) to develop and manage major projects worth over 30 billion dirhams. The company is currently running government projects that were announced in 2019, worth 5 billion dirhams.
- The Memorandum of Understanding signed with the Holding Company (ADQ) provides for the management of a number of projects, including the Riyadh City project, the North Bani Yas project, in addition to other projects in the Al Ain and Al Dhafra regions. These projects include more than 25,000 plots of land and villas for Emiratis and the associated infrastructure.
Asset management unit
- Net operating income for the asset management unit reached AED 383 million, a decrease of 3.5% year-on-year, primarily due to the impact of travel restrictions imposed by the pandemic on occupancy rates in hospitality assets, as well as the tenant dilution policy that extended to retail tenants.
- Aldar’s diversified investment portfolio remains strong, with the average occupancy rate for commercial, residential and retail assets of 87% in Q3 2020.
- Secondary businesses recorded a 5% increase in gross profit for the third quarter of 2020, driven by the growth achieved by Aldar Education, Property Management Company Provis, and Facilities Management Company Khidmah.
- The retail portfolio has witnessed a significant recovery in sales activity since the general closure eased in the mid-2020s, with third-quarter sales remaining stable year on year.
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