Aldar reports 27% increase in Q1 net profit and record Q1 Group sales amid capital deployment and expansion
Abu Dhabi, UAE: 27 April 2022
- Record quarterly Group Development sales of AED 2.2 billion, driven by inclusion of SODIC’s strong Q1 performance and continued momentum in Abu Dhabi’s real estate market
- Expansion of Aldar’s strategic land bank for development with a 6.2 million square metre plot acquired on Saadiyat Island during the second quarter
- Strong liquidity position, with AED 5.6 billion of free cash and AED 4.9 billion of committed undrawn facilities
- Aldar Investment Properties issued AED 1,836 million (US$500 million) Subordinated Perpetual Notes to Apollo Global Management 1. The subordinated perpetual notes are part of Apollo’s AED 5.14 billion (US$1.4 billion) strategic investment into Aldar’s transformational growth initiatives announced in February 2022 – representing one of the largest ever foreign direct investments into Abu Dhabi’s private sector
- Ramp-up in transaction activity by Aldar Investment, with AED 1 billion commitment to expand Aldar Education’s portfolio and entry into Ras Al Khaimah (RAK) market through AED 410 million acquisition of Al Hamra Mall in Q1. Early in the second quarter, acquired AED 770 million Rixos Bab Al Bahr luxury resort in RAK and launched a logistics real estate vertical with the acquisition of Abu Dhabi Business Hub
- Focus on ESG reinforced by a portfolio-wide energy management project to reduce energy consumption by 20%, an agreement to use EWEC’s certified clean energy across 100% of Aldar’s assets which will reduce scope-2 emissions, and the announcement of its first fully sustainable community, Sustainable City – Yas Island. Aldar’s ESG ratings upgraded by Dow Jones Sustainability Index (DJSI) and Sustainalytics to put the company in the top quartile
1 During the period, Aldar Investment Properties LLC (a subsidiary of the Group) issued USD 500 million (AED 1,836 million) Reset Subordinated Perpetual Notes (the “Notes”) to an investor (“Noteholder”) in two tranches. The first tranche amounting to USD 310.5 million was received during March 2022 while the second tranche amounting to USD 189.5 million was received subsequently in April 2022.
Talal Al Dhiyebi
Group Chief Executive Officer of Aldar Properties
“During the first quarter, Aldar not only delivered a strong financial performance, but we also diversified our sources of funding and scaled up our operational capabilities in preparation for further growth opportunities.We attracted a major investment from Apollo Global Management, which is driving the accelerated expansion and diversification of our investment property business. We also entered the high potential market of Ras Al Khaimah through two acquisitions in retail and hospitality, further increasing our geographic footprint, having entered the Egypt market at the end of last year.
In the coming months, Aldar will capitalise on a robust deal pipeline to further broaden our asset base. With demand for quality Abu Dhabi property remaining strong among investors and end-users, we will also ramp up development activity and new project launches, particularly on the expanded strategic land bank on Saadiyat Island.
As we enter an exciting phase of growth, we continue to invest in talent and innovation to ensure efficient delivery of our ambitious strategy, while making strong progress on our ESG framework. By taking concrete steps on energy efficiency and carbon reduction, we aim to be a sustainability leader in the UAE in support of an inclusive, net-zero economy.”
Business Unit Highlights
Aldar Group
| Aldar Group | Q1 2022 (AED) | YoY % |
|---|---|---|
| Revenue | 2.6 bn | +31.5% |
| Gross profit | 1.12 bn |
+44.0% |
| EBITDA | 806 mn | +22.5% |
| Net Profit | 688 mn | +26.5% |
Business Unit Highlights
Aldar Development
This core business unit comprises three main segments: Property Development and Sales, which is responsible for developing and marketing Aldar’s diverse and strategic land bank located in key investment zones in the UAE including Saadiyat Island and Yas Island; Project Management Services, which manages Aldar's fee-based development management business, including government housing and infrastructure projects in the UAE; and Egypt, which manages Aldar’s investment in Egyptian real estate company SODIC (Sixth of October Development and Investment Company).
| Aldar Development (AED MN) | Q1 2022 | Q1 2021 | % Change |
|---|---|---|---|
| Revenue | 1,777 | 1,186 | 50% |
| EBITDA | 456 | 353 | 29% |
| Group Sales | 2,191 | 1,090 | 101% |
| Sales (UAE-only) | 1,512 | 1,090 | 39% |
- Group sales up 101% YoY to reach a Q1 record of AED 2.2 billion.
- Aldar Development’s EBITDA increased 29% YoY to AED 456 million as revenue increased 50% YoY to AED 1.78 billion. This increase was driven by UAE inventory sales and the inclusion of SODIC’s figures for the first time this quarter.
- Gross profit margin increased to 37% up from 31% in Q1 2021 due to higher development segment margins.
- Group revenue backlog of AED 10.4 billion, providing strong visibility on future revenue in both UAE and Egypt operations.
- Projects backlog of AED 41.2 billion at the end of Q1 2022.
UAE Operations:
- With quarterly UAE sales increasing 39% YoY to AED 1.5 billion, this is the seventh consecutive quarter in which Aldar has exceeded AED 1 billion in residential sales. Sales were supported by an increasing overseas and resident expat customer segment.
- Revenue backlog up 66% YoY to reach AED 5.56 billion.
- Cash collections stood at AED 1.57 billion on 31 March 2022.
- Development focus on Saadiyat Island with the launch of Louvre Abu Dhabi Residences at Saadiyat Grove, attracting significant interest from international buyers. At the beginning of Q2, Aldar acquired a 6.2 million square metre land plot on Saadiyat Island, which significantly bolsters the company’s land bank for future development on the island.
- Q1 Adj. EBITDA1 for the Project Management Services business increased by 34% YoY to AED 120 million, mainly due to a sustained ramp-up in Aldar Projects’ fee-based business.
Egypt Operations2 :
- In its first full quarter of inclusion in Aldar’s financial results, SODIC contributed AED 280 million to Aldar Development’s Q1 revenue, with EBITDA standing at AED 50 million.
- SODIC’s sales reached a highest-ever Q1 figure of AED 678 million (EGP 3.74 billion), up 102% YoY, with projects in West Cairo, including the newly-launched ‘The Estates Residences’, accounting for 36% of sales.
- Revenue backlog for SODIC increased 14.8% YoY to AED 4.85 billion (EGP 25 billion) as of 31 March 2022, demonstrating a solid pipeline for future revenue.
- SODIC continues to maintain a strong liquidity position with total cash and cash equivalents amounting to AED 258 million (EGP 1.2 billion).
[1] Adjusted for fair value movements (excluding amortization of leasehold assets) and one-off gains / losses on acquisitions.
[2] FX conversion from EGP to AED at a three-month average of 0.228977 used for revenue, EBITDA and sales, and a spot rate of 0.200903 used for revenue backlog and liquidity position.
Business Unit Highlights
Aldar Investment
Aldar Investment comprises four main segments representing over AED 22 billion of assets under management. Investment Properties houses Aldar’s core asset management business comprising over AED 18 billion of prime real estate assets across retail, residential and commercial segments. Aldar Education is the leading private education provider in Abu Dhabi. Hospitality and Leisure owns a portfolio of hotel and leisure assets principally located on Yas Island, Saadiyat Island, and Ras Al Khaimah. Principal Investments includes Provis, the property management business, Khidmah, the facilities management business, and Pivot, a construction services business.
| Aldar Investment1 (AED MN) | Q1 2022 | Q1 2021 | % Change |
|---|---|---|---|
| Revenue | 859 |
788 | (9%) |
| EBITDA | 374 |
332 | (13%) |
| Occupancy (Investment Properties)2 | 92 % |
87% | (5%) |
[1] Excludes Pivot
[2] Contracted or leased occupancy as of 31 March 2022.
- Aldar Investment’s Q1 revenue grew 9% YoY to AED 859 million, with EBITDA for the quarter increasing 13% YoY to AED 374 million. This was mainly driven by the strong performance of both Retail and Hospitality and Leisure, in addition to higher contributions from the Principal Investments business.
- The Investment Properties Q1 Adj. EBITDA1 increased 8% YoY to AED 299 million demonstrating increased profitability across the portfolio. Occupancy across the diversified portfolio increased to 92% from 87% a year earlier.
- Residential Q1 Adj. EBITDA increased 10% YoY to AED 107 million. The overall portfolio showed continued strength, reaching an occupancy rate of 95%, up from 88% in the same period last year.
- Retail Q1 Adj. EBITDA increased 13% YoY to AED 117 million. Yas Mall achieved 96% occupancy at the end of March, up from 78% from a year earlier, driven by strong demand from retail tenants as a result of the successful mall repositioning and redevelopment. In February, Aldar Investment completed its first investment in Ras Al Khaimah through the acquisition of the 27,000 sqm Al Hamra Mall for AED 410 million with additional development rights for 11,200 sqm of gross floor area and an option to acquire an additional 7,400 sqm for retail and commercial use.
- Commercial Q1 Adj. EBITDA in line with last year at AED 74 million. Occupancy rate across the commercial portfolio stood at 91% as of 31 March 2022.
- In Q2, Aldar Investment introduced a logistics real estate vertical with the acquisition of a 70% equity interest in Abu Dhabi Business Hub. The acquisition marked the creation of Aldar Logistics, which will focus primarily on the United Arab Emirates, with the potential to expand into Saudi Arabia and Egypt.
- The Hospitality and Leisure business witnessed significant growth during the quarter with Q1 EBITDA reaching AED 22 million, up 57% YoY as pent-up demand for leisure travel accelerates and in-person meetings, events, and conferences drive a rise in business travel. In April, Aldar Investment acquired the ultra-all-inclusive Rixos Bab Al Bahr beach resort in Ras Al Khaimah for AED 770 million with additional development rights for 250,000 sq. ft of gross floor area.
- Aldar Education reported a 6% decrease in EBITDA to AED 36 million. This marginal decline was mainly due to additional overheads to support upcoming growth plans, whilst enrolments increased to over 26,300 students. In February, Aldar Education announced a AED 1 billion investment plan to diversify its portfolio of schools and increase the number of students to more than 40,000 by the 2024-2025 academic year.
- The Principal Investments business witnessed a 24% increase in EBITDA, excluding Pivot, reaching AED 16 million. This was largely driven by increased contributions from Provis.
[1] Adjusted for fair value movements (excluding amortization of leasehold assets) and one-off gains / losses on acquisitions.
ESG
As one of the UAE’s leading real estate developers, Aldar has a duty to uphold the highest international standards for ESG practices. ESG is a core pillar of the company’s long-term growth strategy, with strong governance and responsible environmental and social impact integrated into its investment processes and business decisions.Under the theme ‘Commitment and Action’, highlights of Aldar’s ESG activities this quarter include:
- In line with the UAE’s Net Zero by 2050 Strategic Initiative, Aldar formed a joint venture for the development of a 397,000 sqm renewable energy-powered sustainable community in Abu Dhabi – ‘Sustainable City – Yas Island’
- Aldar launched a portfolio-wide energy management project to reduce its energy consumption by approximately 20% across 80 assets and save approximately AED 40 million per year. The project is now in retrofit stage with completion expected at the end of 2022.
- To promote decarbonisation in the real estate sector, 100% of Aldar’s owned and managed operating assets will now be powered by Emirates Water and Electricity Company (EWEC)’s clean energy sources for the next five years.
- Aldar scored 58 points on the Dow Jones Sustainability Index, representing a 53% YoY improvement. Sustainalytics also ranked Aldar 9th in the global ranking of 107 diversified real estate companies and gave the company a score of 16.6 on its ESG risk assessment scale, indicating a low level of ESG risk. The scores put Aldar in the top quartile of each ranking.
Corporate Highlights in Q1’22
- Customer Experience: Aldar’s Net Promoter Score (NPS) increased by 22 points during Q1 2022, compared to the same period in 2021.
- Innovation: Aldar increased its score on the Global Innovation Management Institute (GIMI) Innovation Index, which measures the company’s innovation strategy, capacity, and discipline. Since the methodology was adopted in 2019, Aldar has increased its overall score from 3.7 to 6.9.
Aldar also launched Abu Dhabi’s first regulated short stay apartments through Cloud Living at The Bridges and Arc Towers. Cloud Living offers flexible stay options and all-in-one pricing with no hidden costs or utilities.
