Aldar 'actively' seeks acquisitions as it reports 11% jump in third-quarter profit

The company has cash pile of $1.85bn at the end of September, which it intends to use to finance potential property portfolio acquisitions, chief finance and sustainability officer says

Aldar Properties reported an 11 per cent jump in third-quarter profit boosted by developmental sales and lower provisions amid a strong economic recovery. Sammy Dallal / The National

Aldar Properties is "actively" seeking acquisition opportunities in the UAE, as Abu Dhabi’s biggest listed developer reported an 11 per cent jump in its third-quarter profit on the back of record quarterly development sales amid a continued recovery in the emirate's property market.

Net profit attributable to owners of the company for the three months to the end of September climbed to Dh473 million ($128.84m), Aldar said in a statement to the Abu Dhabi Securities Exchange, where its shares are traded. Provisions, impairments and writedowns dropped 44 per cent during the period to Dh30.8m, pushing the company's profitability.

The company recorded development sales worth Dh2.69 billion in the quarter, boosting year-to-date total sales to Dh6.14bn.

"Aldar’s strong financial and operating performance this year continued into the third quarter, reflecting our ability to sustain growth. As post-pandemic recovery gathered momentum, our diversified businesses continued to rebound at pace," said Talal Al Dhiyebi, group chief executive of Aldar Properties.

The successful launch of new projects, including Yas Acres Magnolias and Al Gurm Phase II, as well as high demand for its existing inventory at Mamsha, boosted sales during the quarter, it said.

Direct costs in the third quarter fell 10 per cent to Dh1.25bn, while selling and marketing expenses rose.

Net profit for the first nine months of the year climbed 27 per cent to Dh1.53bn, compared to the same period a year earlier due to higher revenue and lower provisions.

The UAE property market, which softened due to a three-year oil price slump that began in 2014 and oversupply concerns, is recovering as people upgrade to larger homes with outdoor amenities amid the remote working and learning trend sparked by Covid-19.

Average price for residential units in Abu Dhabi increased 2.2 per cent in the first eight months of this year, with the average price of apartments rising 1.9 per cent and average villa price increasing 3.1 per cent, according to a new report from CBRE.

Aldar, the developer behind Abu Dhabi's Formula One circuit, is seeking attractive and value accretive acquisition opportunities to grow its portfolio of assets, chief finance and sustainability officer, Greg Fewer, told a media call on Wednesday.

The company sees consolidation opportunities within the UAE, particularly in Abu Dhabi's real estate market across retail, commercial, office, residential, education, warehousing and logistics segments. Aldar has a pipeline and is "actively looking at transactions", Mr Fewer said.

"Those are the sectors where we see very interesting acquisitions both in Abu Dhabi and the UAE," he said. "Historically, we have shown a strong ability to make large transformational acquisitions and that has added a lot of value to our shareholders."

Aldar at the end of September had Dh6.8bn in cash on its balance sheet, which it intends to use to fund deals, he said.

"Our cash pile continues to build up and in our market, historically, it’s important to remain liquid and ready to acquire when large portfolios of real estate become available," Mr Fewer said. "Those are value creating transactions. They come infrequently but when they do come they are very accretive and we are positioned to transact on those."

Aldar, which is leading a consortium of investors that submitted a non-binding offer to acquire a majority stake in Egypt’s Sixth of October Development and Investment Company (Sodic), expects to hear from regulators in "the days and weeks ahead", Mr Fewer said.

There's is no official timeline as to when the deal could be approved, but the proposed acquisition of a majority stake in Sodic is part of Aldar’s overall expansion strategy. It signals "our intent to enter that market in size and scale, with high degree of impact", Aldar's head of finance said.

"We love the Egyptian market. We think it has a lot of very attractive attributes and [will be] a really strong centre for growth for us going forward and you should see more from us in that space," he said.

The company plans to bring new developments to the market, driven by its expanding client base, including overseas investors.

"We expect to see operating activities across our commercial and retail assets continue to grow in line with the macroeconomic recovery that is well underway," Mr Al Dhiyebi said.

Economic support measures and government initiatives have also helped in improving the investment sentiment. Factors, including “reforms on the residency side”, including long-term visas, golden visas and real estate investors visas are having an impact in terms of more expatriates investing in homes in the UAE, Mr Fewer said.

Expatriate buyers are particularly interested in developments in areas including the Yas and Saadiyat islands and account for more than 50 per cent of investor base there.

"We are seeing upwards of 70 per cent of sales ... [from] new customers" Mr Fewer added.