Abu Dhabi’s Aldar sees 2012 profits up 109%

Aldar Properties, Abu Dhabi’s largest real estate developer, reported net profit for 2012 surged 109 percent to AED1.340bn (US$364.8m), on the back of increased sales and the restructuring of its credit facilities, it was announced on Monday.

Revenue increased 69 percent to AED11.403bn, on the back of an 83 percent rise in revenue from land sales and the handover of completed units.

While the developer, which is 35 percent owned by the Mubadala Development Company, ended the year with cash and bank balance reserves down 45 percent to AED 2.259bn, it successfully renegotiated its debt and credit facilities.

Total borrowing fell 23 percent to AED14.014bn mainly because of repayment of loans, while the developer drew down AED800m of a new AED4bn revolving credit facility.

“This facility will enable the Company to optimally manage its working capital and liquidity requirements over the next two years,” the company said in a statement. “In light of these results, the Board of Directors has recommended a cash dividend of 6 fils per share for shareholder approval at the AGM,” it added.

“2012 has been a truly exceptional year for Aldar… Our shareholders will benefit from both the continued efforts of our employees to realise value from our sizeable asset base and from our proposed merger with Sorouh that will create a significantly stronger platform from which to drive sustainable growth," said Ali Eid AlMheiri, chairman of Aldar Properties.

On January 21, the boards of Aldar Properties and Sorouh Real Estate, the Gulf’s 10 and 11 biggest real estate companies in terms of market cap, recommended a merger between the two companies to their shareholders and a final decision is expected in March.

In terms of product delivery, Aldar sold 102 residential units in 2012, worth a total of AED352.9m and handed over 1,882 residential units to customers at Al Raha Beach during the year.

Yas Mall pushed ahead, with 62 percent of units leased so far, while the Yas Waterworld was handed over in the fourth quarter and is expected to attract 700,000 visitors in the first 12 months.

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Merger to shore up real estate market

DUBAI: Abu Dhabi's move to merge builders Aldar Properties and Sorouh Real Estate is geared towards shoring up sovereign wealth fund Mubadala and stabilising the emirate's brittle real estate market.

Bankers say that a deal is likely to be effected through a share swap, which would dilute Mubadala's sizeable stake in Aldar, a developer hit by stagnant sales and falling asset prices, and improve its ability to tap capital markets.

"Mubadala will emerge as the winner in this merger ... the terms of the deal are not clear but it's likely that the merger will reduce Mubadala's stake and its exposure to Aldar," said an Abu Dhabi-based property sector analyst.

Aldar has swiftly become a millstone around the neck of Mubadala, a fund with $46 billion in assets and investments including stakes in Carlyle and General Electric, and a year ago, Mubadala had to come to Aldar's aid by subscribing to the developer's $2.8bn bond.

Sources have said that attempts have been made for the fund to sell its Aldar stake or set up a new holding company that could take over the equity, a move denied by Mubadala.

Talks for the merger, announced on Sunday and which would see the formation of a property firm with $15bn in assets, have been styled as having "the blessing of the Abu Dhabi government", widely seen as code for a government-enforced deal.

"Mubadala's role was that of a stop-gap entity who would shoulder the Aldar responsibility for a while. It was never the perfect solution," said a Dubai-based investment banker.

The state fund's stake is expected to go up to 60 per cent from 49pc when it converts the remaining portion of its Aldar bonds into equity.

"Any deal will be in the form of a share-swap agreement," said an Abu Dhabi-based source who is aware of the talks.

"I am sure there is no discussion of exchanging cash in the current market. Mubadala's stake will be diluted if the merger goes through but they will retain a stake in the combined entity. What the share-swap ratio will be and what percentage Mubadala will retain after the deal is all under discussion."

Mubadala, for its part, stuck to a one-line statement.

"As a long-term shareholder in Aldar, Mubadala is supportive of efforts to increase value to Aldar's stakeholders," it said.

The deterioration in Abu Dhabi property has been gradual.

The emirate has given Aldar nearly $10bn in bailout funds, almost equivalent to the amount it extended to rescue Dubai just over two years ago.

Shares of Aldar and Sorouh jumped 10pc yesterday as investors welcomed signs of consolidation in the Abu Dhabi real estate market, which is set to record a further 11pc fall in prices this year, according to a Reuters poll.

Aldar's deputy chief executive Mohammed Khalifa Al Mubarak said efforts to appoint a working group had begun but banks were not part of the committee.

"At this point, we expect the working group to only comprise representatives from both companies," he said, adding that he hoped the group would be set up this month.

Source: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=325672