Aldar First-Quarter Net Beats Estimates on Recurring Revenue

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Aldar Properties PJSC reported first-quarter profit that beat analysts’ estimates as the Abu Dhabi Ferrari theme park developer sold land and generated higher rental income.

Net income advanced to 618 million dirhams ($168 million) from 453 million dirhams a year ago, the company said in a statement Thursday. That beat the 441 million-dirham mean estimate of three analysts compiled by Bloomberg. Gross profit from recurring revenue assets jumped 61 percent to 368 million dirhams.

“We have seen a strong first quarter driven by the growth in recurring revenues from our investment property portfolio,” Chief Executive Officer Mohammed Al Mubarak said in the statement. “Interest in our recently announced developments in Yas Island and Shams Abu Dhabi and the demand for our Al Merief and Nareel Island land plot sales demonstrates that we are bringing the right mix of products to market.”

Abu Dhabi’s largest developer received billions of dirhams in government bailouts after the property market collapsed in 2008 and has been reducing debt and focusing on growing recurring income. The developer was raised to investment grade by Moody’s Investors Service and Standard & Poor’s last year.

Revenue Drops

Revenue declined 19 percent to 1.38 billion dirhams, while gross profit margin more than doubled to 47 percent from 20 percent a year earlier, helped by the sale land in Abu Dhabi. Aldar has a land bank of 77 million square meters (829 million square feet) in the United Arab Emirates’ capital, Chief Financial Officer Greg Fewer said on a conference call. The company plans to sell the land “opportunistically” and expects a profit margin of at least 50 percent from the sales, he said.

Aldar sold all 281 land plots at the Al Merief development in March, booking sales of more than 600 million dirhams. Residential rents in Abu Dhabi, the capital of the United Arab Emirates, climbed 2 percent in the first quarter from the preceding three months, CBRE Group Inc. said.

Aldar aims to reduce its debt to 6 billion dirhams to 6.2 billion dirhams by the end of 2016 and is open to refinancing and extending repayment periods, Fewer said on the call.

Aldar was up 1.4 percent at 2.83 dirhams at 11:35 a.m. in Abu Dhabi trading today. The shares have gained 6.8 percent this year, compared with a 2.3 percent increase in Abu Dhabi’s ADX General Index.

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