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Abu Dhabi Sorouh reports 79% drop in second quarter net profit
Source: BI-ME with Boomberg , Author: Posted by BI-ME staff
Posted: Tue July 27, 2010 10:01 am
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UAE. Sorouh Real Estate PJSC, Abu Dhabi’s second-biggest property developer by market value, reported a 79% decline in second quarter profit, missing analysts’ estimates.

Net income attributable to owners of the parent dropped to AED30.8 million (US$8.4 million) from AED148.3 million a year earlier, the company said in a statement to the Abu Dhabi bourse today. The median estimate of three analysts was for a profit of AED68 million, according to Bloomberg data.

 High mortgage rates remain the biggest obstacle to a housing recovery in the emirate, Sorouh’s managing director, Abubaker Seddiq Al Khouri, said in April.

Revenue at the property developer will fall in the second quarter because of a “lack of land sales to sub-developers and slow deliveries of projects,” Chet Riley, a Dubai-based analyst at Nomura Holdings Inc., said on July 5. Sorouh said second- quarter revenue dropped to AED189.8 million from AED978.2 million.

“The recent signing of a 2.35 billion-dirham four-year finance facility has resulted in almost AED2 billion  of free incremental cash and facilities being available to Sorouh,” according to the company statement. “These funds will be used to finance the construction of Shams Gate and other developments in Abu Dhabi.”

The four-year facility, a combination of term loans and revolving credit with both conventional and Islamic tranches, is secured by a portion of Sorouh's land bank, including Shams Gate.

A key issue for Sorouh during the second half of 2010 will be how much money it brings in from the handover of apartments at the Sun and Sky Towers to their buyers, Riley said. Ninety percent of the 1,100 apartments have been sold, and Sorouh may recognize as much as AED2.3 billion in revenue from them, according to the analyst.

The company said on July 1 that it won government contracts valued at more than AED2 billion to build 1,000 homes for UAE nationals.

 

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