Development sales totalled AED 333 million, led by inventory sales. This meant that, as of end of Q1 2020, 83% had been sold across its development pipeline. Aldar has leveraged its digital transformation programme to facilitate sales amid government-mandated or recommended guidelines including social-distancing and curfew and has introduced virtual tours for all available units. Moreover, the Company has deployed its market leadership position to partner with Abu Dhabi banks to provide attractive financing packages for homebuyers, complementing government and UAE Central Bank incentives to support the real estate sector.
The Asset Management business has displayed resilience, with a particularly solid performance in the first two months of the quarter. In Q1 2020, occupancy remained steady at 89% across the Investment Properties portfolio, which includes retail, residential and commercial assets, due to long-term, committed lease contracts and a high-quality, diversified portfolio.
The adjacent businesses segment, which includes Aldar Education, property management firm Provis, facilities management company Khidmah and Aldar's district cooling assets on Saadiyat Island, continued to contribute positively to Aldar's financial performance during the period. Their combined gross profit increased 40% to AED 52 million.
As travel restrictions and temporary mall closures took effect in the end of February, the Covid-19 situation mainly affected Aldar's hospitality and retail assets. However, the diversified asset management portfolio delivered a net operating income (NOI) of AED 404 million in Q1 2020. Select retail assets, including Yas Mall and Al Jimi Mall, reopened in May and are implementing strict social distancing measures.
While Covid-19 will impact the operating environment in 2020, Aldar benefits from a robust balance sheet, with debt maintained well within its established debt policies across the development and asset management businesses.
As at 31 March 2020, Aldar held AED 6.8 billion of free cash and undrawn credit facilities. This includes a new AED 500 million credit facility agreed in the first quarter at the attractive rate of Eibor + 1%. Aldar Investment Properties, the 100% owned subsidiary that owns a majority of Aldar's recurring revenue generating assets, is the only corporate in the region with a Baa1 credit rating and stable outlook.
Revenue was stable vs. Q1 2019 despite the challenges related to Covid-19. This is owed to the strength of the business across its diversified assets, demand for its quality developments, long-term lease contracts for high-quality assets in the investment properties portfolio and high growth in adjacent businessesGross profit was little changed and gross profit margin was 40% (vs. 41% in Q1 2019) owed to the prudent cost management and as the Company reaped the benefits of its digital transformation and operational efficiency driveNet profit decreased in Q1 2020 mainly due to a one-off fair value adjustment of AED 95 million
Covid-19: Proactive response to support key stakeholders Aldar has taken a range of precautionary safety measures across all assets and in its communities, including deploying specialized disinfection services to ensure a safe and seamless property handover processSince March, Aldar has launched programmes worth up to a cumulative AED 190 million aimed at supporting residential communities, schools, retail partners and home buyersAcceleration in digital transformation is enabling seamless continuity in Aldar's services
Development Management: Solid progress across projectsDevelopment sales amounted to AED 333 million, led by inventory sales at Nareel Island, West Yas, Yas Acres and JawaherDevelopment segment revenues and gross profit increased 13% to AED 808 million and 4% to AED 290 million respectivelyDevelopment pipeline is 83% sold, with development revenue backlog at AED 3.9 billion at end-MarchHandovers initiated at several development projects – The Bridges on Reem Island and Yas Acres on Yas Island. On Saadiyat Island, handovers continue at the already completed Mamsha and Jawaher
Asset Management: Resilient, diversified investment portfolioQ1 net operating income (NOI) from income generating assets was AED 404 million, down 6% year-on-yearResidential and commercial occupancy stood at 88% and 91%, respectively, broadly in line with Q1 2019Retail occupancy was steady at 89%. Major retail assets were temporary closed from late March. As of May, select retail assets, including Yas Mall and Al Jimi Mall, have reopened and are implementing strict social distancing measuresHospitality occupancy was 64%, with hotels seeing direct impact from travel restrictions from end-February
ESG: Embedding Sustainability practices across the business Memorandum of Understanding with Abu Dhabi Government agency Ma'an to launch first social impact bond for people of determinationMobilisation of employees for AED 1 million donation to "Together We Can" campaign launched by Ma'anDirect donation by Aldar to Sandooq Al Watan initiative to support purchase of 10,000 laptops for students to facilitate distance learning