Sorouh Posts Dh199M Fourth Quarter Net Loss
Sorouh Real Estate Company PJSC, Abu Dhabi’s second biggest property developer by market value, reported a fourth quarter loss yesterday.
Sorouh reported a net loss of Dh199 million last quarter after it set aside money to cover impairments and provisions; the company made a profit of Dh28.1 million during the same period in 2009.
The developer reported Dh16.2 million net profits in 2010 compared to Dh495 million in 2009 after provisions and impairments. Revenues for 2010 plunged to Dh1.2 billion from Dh3.1 billion in 2009.
Revenues for the fourth quarter were Dh214 million, down from Dh438 million in the fourth quarter of 2009; principally driven by recurring rental income from Sas Al Nakhl, Khalidiya Village and Al Oyoun, construction income from national housing projects and revenues from subsidiary companies.
Sorouh’s earnings comes after Abu Dhabi’s struggling developer Aldar Properties reported its largest quarterly loss, as it booked massive writedowns on its assets.
Plots
"The reduction in revenue from the corresponding period in 2009 is due to a decrease in the number of plots and units recognised in the current period," Sorouh said in a statement.
The company said that over Dh2 billion was invested in various projects across its portfolio during 2010 including the Sun and Sky Towers, the Gate Towers, Sorouh Tower at Danet Abu Dhabi and Sorouh’s mall in Al Ain. The Sun and Sky Towers on Abu Dhabi’s Reem Island development were originally scheduled for completion in November 2009.
Saeed Eid Al Ghafli, Sorouh’s Chairman, said: "We are very pleased to report another year of profit despite the delays in handing over Sun and Sky, and the conservative accounting approach of taking provisions and impairments to ensure that our assets are held at fair value.
"During the year, we successfully raised Dh2.7 billion of financing, which leaves us well positioned to complete our projects and deliver value to all our stakeholders in 2011 and beyond."
The company said it maintained a strong balance sheet with net assets at the end of 2010 of Dh6.2 billion, up from Dh6.1 billion in 2009. It also said its total bank borrowings are Dh1.7 billion.
Matthew Green, Head of Research and Consultancy UAE at CB Richard Ellis Middle East, said Abu Dhabi’s real estate market had a tough 2010 as rents and values corrected against the backdrop of weakened demand and a subdued economic environment.
Significant new supply and strong competition from neighbouring Dubai have also impacted heavily upon market performance and this all translates into reduced profits for local developers," he said.
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