Abu Dhabi-based real estate developer Sorouh Real Estate (Sorouh) on Wednesday reported a 54.5% rise in its third-quarter net profit and said no decision has been taken so far about its proposed merger with rival Aldar Properties.
Sorouh had net consolidated profit of Dhs129.2 million, up from Dhs83.6 million in the prior-year period, it said in press release on its third quarter results for the period ended 30 September 2012.
Sorouh continued its strong performance in Q3. As its net profit was up 55 per cent year-on-year, reflecting continued strengthening of sustainable recurring income streams from Sorouh s National Housing projects, investment portfolio and the release of contingencies and provisions.
Revenues from National Housing projects increased significantly quarter on quarter to Dhs607 million from Dhs68 million in 2011, a nine fold increase.
A further 10 units at Sun and Sky (including 4 commercial units) and 2 villas at Golf Gardens were handed over, resulting in Dhs94m of revenues.
The leasing portfolio generated Dhs51 million of revenue, 19 per cent up on last year. Sun and Sky is now at 95 per cent occupancy, and Al Murjan at 90 per cent. Interest continues for bulk leases from corporate clients, and we are confident of reaching our goal of half a billion Dirhams of recurring revenues by the end of 2014.
Other income increased mainly through the release of Dhs40 million of contingency provisions for Sun and Sky, which are no longer required now that the towers are complete and have been operational for over 12 months.
Our financial position is robust, with cash collections of approximately Dhs1.6 billion up until the end of the third quarter, Dhs774 million of cash on the balance sheet and low gearing of 38 per cent.
Managing Director of Sorouh , commented: “Profit growth has continued during this quarter driven primarily by our by National Housing developments. The quality of the business’s overall earnings continues to mature as we build more sustainable revenues and a stronger investment portfolio.
“During the next quarter, we expect to make further progress on National Housing developments and move closer to the completion of the Gate Towers, which we will begin to handover early in 2013.
Sorouh has a strong balance sheet and remains well positioned to deliver its development portfolio in the coming years.” Sorouh confirmed that discussions regarding the possible merger with Abu Dhabi’s Aldar Properties PJSC “continue to progress and are at an advanced stage. A decision will be taken by the Company’s board of directors as to whether or not to recommend the merger to the Company’s shareholders in due course.