Abu Dhabi developer reduces borrowing costs
Abu Dhabi-based developer Aldar Properties has posted increased profits in the second quarter of this year, fuelled by strong growth in residential leasing and unit handovers.
Aldar announced that its profits hit AED506m ($137.8m) for the second quarter of 2014, an increase of 12 per cent compared with the preceding quarter.
The company saw profits soar by 168 per cent, compared with the same quarter in 2013, after results were adjusted for one-time effects booked when the firm merged with fellow UAE developer Sorouh Real Estate in 2013.
Revenues in the second quarter rose to AED2.2bn, an increase of 74 per cent compared with the same quarter in 2013.
The company says profits were driven by the continued handovers of units at Gate Towers, which is part of a residential development on Reem Island in Abu Dhabi.
Aldar also reports strong growth in residential leasing revenue at its Al-Rayyana development, a gated community comprising more than 1,500 apartments in Abu Dhabi.
The operational achievements during the quarter have been particularly impressive, with sales and leasing activity at an all-time high as our residential properties continue to benefit from a flight to quality, read an official statement from Mohammed Khalifa al-Mubarak, CEO of Aldar.
The developer has also reduced its borrowing costs by refinancing and repaying its debts earlier this year.
It repaid a $1.3bn bond due in May using internally generated cash and a further AED4bn in undrawn bank facilities. It also refinanced AED1.6bn of existing bank loans with new lower-cost facilities with longer maturities.
Since its merger with Sorouh, Aldar has reduced its gross debt from AED14.2bn to AED10bn, which includes an AED1bn reduction in gross debt this quarter.
The company is expecting its planned new developments to support further earnings growth. In April, it launched three new residential developments in Abu Dhabi worth a total of about AED5bn. Off-plan sales for two of the developments took place in the second quarter, with all units sold.
Off-plan sales are expected to also reduce Aldars need to seek further bank debt to fund developments, said Abubaker Seddiq al-Khoori, the developers chairman, in April.
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