Aldar considers refinancing debts

Aldar Properties may refinance its debt, supported by improved credit rating and reduced borrowings, and seek better terms like cheaper rates and longer duration from lenders, Greg Fewer, the company’s chief financial officer said.

The Abu Dhabi-based developer is set to collect Dh3.1 billion from government contracts through December 2017. After its Dh1.1 billion debt payment in the second quarter, the company’s debts now stand at Dh7.1 billion.

On Tuesday, the company announced it recorded Dh601 million in net profits during the second quarter of this year, marking an 18 per cent increase from the Dh509 million in the second quarter of 2014.

The figure brings profits for the first half of the year to Dh1.17 billion — up from Dh964.8 million in the first half of 2014.

Revenues fell, however, to reach Dh1.1 billion — down from Dh2.1 billion in the second quarter 2014 after Aldar’s decision to adopt the IFRS 15 revenue recognition accounting policy. The quarterly figures bring revenues for the first half of the year to Dh2.28 billion — down from Dh3.9 billion in H1 2014.

Fewer said he expected more revenue to come from Yas Mall as more tenants come in. “We have about 340 units out of 370 trading in the mall right now, and when they start trading, that’s when we start recognising revenue. We still have a bit of revenue growth still to come, so in the third and fourth quarters of this year, we’d expect the final 15 per cent of tenants to complete their fit-outs, which would allow us to start recording revenue,” he told Gulf News.

Fewer added that he expected the company to continue to grow its recurring revenues over the next 12 months. “The asset base is still stabilising. We’ve got very large new assets that have just been introduced into the portfolio. From a development perspective, I’d also expect to see new product launches to come from Aldar over the coming quarters.

“We still believe that there is demand for the correct kind of product in the Abu Dhabi market, and we will introduce this product at the right time,” he said.

Weak liquidity

On Tuesday, Aldar’s shares, which are traded on the Abu Dhabi Securities Exchange, stood at Dh2.63 — down 1.5 per cent. However, Sebastien Henin, head of asset management at The National Investor, attributed the drop to weak liquidity in the market rather than fundamental factors.

“I think the results were above estimates because the expectations were below Dh500 million for Q2. The market was down today overall. Even if you look at Saudi Arabia, oil prices fell, and the market was late to react because we are in the summer and a lot of investors aren’t here,” he said.

Henin added that despite the positive results, the company still has to face certain challenges such as reducing its debts. “They also want to have more recurring assets in the portfolio. They want to do what Emaar did, which is move from a pure real estate developer in order to weather the storm during bad economic environments,” he said, adding that the move to adopt IFRS 15 was another way to reduce volatility.

Aside from residential property, Aldar’s portfolio now includes retail, hotels, and offices, with Yas Mall being one of their largest assets.

— With inputs from Bloomberg



Source: Sarah Diaa, Staff Reporter,


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