Abu Dhabi’s biggest developer says weak results were mainly down to failing to sell any land from October to December
Abu Dhabi’s biggest developer Aldar Properties has announced its first ever quarterly loss, totalling over 500m dirhams (£87m) for the fourth quarter of 2009. It also disclosed it has sold assets to the Abu Dhabi government, which analysts believe may be in lieu of repaying a loan. The weak results were mainly down to Aldar failing to sell any land in the quarter.
Aldar recorded an operating profit of 906.8m dirhams for the full year of 2009, down from 3.37bn dirhams the previous year. Revenues for 2009 fell to 1.98bn dirhams from 4.98bn in 2008 owing to reduced land sales.
Developments under construction also fell, to 18bn dirhams from 23bn dirhams in 2008. Aldar said this was owing to the number of projects completed during the year.
Aldar revealed it has sold off parts of its portfolio, including “certain infrastructure and property assets” on Yas Island, which boasts the Formula One track and hotel, which opened in December, to the Abu Dhabi government. The transaction may not result in any cash for Aldar, because while the review says these disposals are worth 9.138bn dirhams, analysts said that the transaction may be in lieu of repaying the government for previous loans. The government previously loaned money to Aldar, which then issued a bond to Mubadala Development to fund work on Yas Island.
Chet Riley, analyst at Nomura Securities, said today in a note: “We think it is likely that this ‘sale’ will be reflected in a ‘repayment’ of the Yas Island loan for the value of infrastructure and PPE, so there is probably no cash to be remitted back to Aldar.”
Last week Building reported that Aldar was slowing down the pace of development on its flagship project, the £13bn Al Raha Beach scheme, which amounts to building a city for 120,000 people on the outskirts of Abu Dhabi’s city centre.
Aldar has a joint venture with Laing O’Rourke and although both sides deny it has been terminated, it is widely thought to have been reduced in scope.